Displaying items by tag: Consumption

Brazil: According to Valor Economico, estimates from the cement industry association Sindicato Nacional da Indústria do Cimento (SNIC) point to a retraction in domestic cement demand in 2015, the first market dip in the last 10 years.

Some estimates point to a 10 - 12% decrease, eventually 15% if there is no pick up in demand. There was a 1% increase in cement demand in 2014, as the sector was pushed by construction activities and abundant credit offers at favourable rates. Cement sales in 2014 grew by 1.4% to 70.9Mt and imports fell by 20.4% to 817,000t. Apparent cement consumption in 2014 grew by 1% to 71.7Mt.

The SNIC has said that consumption could fall to around 60Mt in 2016. Installed capacity is 90Mt/yr and 10Mt/yr of extra cement production capacity is expected in 2015.

Indonesia: Cement consumption fell by nearly 4% year-on-year during the first five months of 2015, the biggest decline in the January - May period in the last six years. The fall has been blamed on the country's slowing economy.

Data released by the Indonesian Cement Association show that cement demand in January - May 2015 fell by 3.8% year-on-year to 22.9Mt. It was the steepest drop so far in 2015. Consumption has declined consistently since February 2015. It was also the biggest drop recorded since 2009, when domestic demand fell by nearly 7% year-on-year due.

Indonesia's economy grew by 4.7% in the first quarter of 2015, the slowest in six years and since the start of the global financial crisis. Cement consumption has been a parameter in emerging markets' economic growth. "Cement demand has not fully recovered yet due to slower economic growth, relatively high interest rates, changes in property regulations and bleak commodity exports, which hampered property demand and consequently reduced cement consumption," said Marwan Halim from the stockbroking arm of United Overseas Bank Ltd, UOB KayHian, in a report. Bank Indonesia has maintained its interest rate at 7.5% to curb inflation and maintain its currency, while mortgage regulation and a lower price threshold for property products subject to 20% income have contributed to constraining the property industry.

Cement consumption in May 2015 fell by 7.9% year-on-year, much steeper than the 1.1% decline recorded in April 2015. It was the biggest May drop recorded since May 2009. Lower sales in May 2015 occurred in almost every part of the country, although East Nusa Tenggara and West Nusa Tenggara Provinces saw monthly sales rise by nearly 50% year-on-year. Commodity-based provinces experienced the highest declines during the month, with South Kalimantan and East Kalimantan making the steepest plunges with 41% and 24%, respectively. Even West Java, which traditionally has one of the highest cement consumption rates in Indonesia, suffered a sales decline of 8.3% year-on-year in May 2015.

Ethiopia: The Ministry of Industry has released a draft Cement Industry Development Strategy that intends to increase domestic cement consumption to 20Mt/yr by 2025. Around US$30m will be required to realise the strategy plan that will include providing support to cement plants and overcoming the general shortage of cement in the country. The draft strategy was prepared by the Adama Science and Technology University and has been discussed by stakeholders. At present Ethiopia consumes 6Mt/yr of cement.

Brazil: According to Datamark, the Brazilian cement industry has doubled in size, moving from 10th place to 4th place in terms of global consumption. Currently, Brazil's cement consumption is only behind the US, India and China. It is expected that Brazil's cement consumption will reach 75Mt/yr by 2016 and 85Mt/yr by 2020.

India: A study by management consultants AT Kearny, in association with the Confederation of Indian Industry, has said that the per capita consumption of cement is expected to grow to 385 - 415kg in 2025 from 185kg at present. According to the study, cement demand is likely to increase by 2.5 to 2.7 times to 550 – 660Mt/yr over the same time period. While the infrastructure segment would lead the growth, the residential segment will continue as the largest consumer, constituting 42 – 45% of the total demand.

Qatar: Rising government infrastructure spending is predicted to double demand for cement in Qatar by 2017. Dubai-based financial services firm Arqaam Capital has reported that the Qatari government is expected to release up to US$50bn for construction projects in 2014, a rise of 15% compared to 2013.

The move follows the state's plan to invest US$208bn on infrastructure developments in 2013 - 2018, largely linked to the 2022 World Cup. Arqaam has projected that, given that current projects are worth US$70bn and have an average churn rate of 3- 4 years, the expenditure implies that cement demand will double within the next three years. Cement demand is expected to grow to hit 9.4Mt/yr in 2017.

"We expect production capacity and demand levels to reach equilibrium by 2018. Our forecasts are on the conservative side as Qatar's Ministry of development and planning's most recently published survey suggests demand for limestone is set to increase by 131% in 2014 and 127% in 2015," said a report by Arqaam.

Indonesia: Indonesia's cement consumption is expected to rise by more than 10% year-on-year to 62Mt in 2013, compared to 55Mt in 2012. Tuti Rahayu, the Industry Ministry's director for downstream chemical industry, informed the Antara News agency that the increase in demand for cement was due to the country's growing infrastructure development.

According to Tuti, consumption of cement in Indonesia grew by 14.5% year-on-year in 2012 to 55Mt compared to 48Mt in 2011. Demand in the eastern parts of country grew the most rising by nearly 54%. The country has had to build at least two new cement factories each year to meet surging demand. Tue added that a mixture of state-run and private companies have started building new factories across Indonesia in Papua, Sulawesi, Sumatra and Java.

Spain: Cement consumption in Spain will close 2012 with a drop of 33% year-on-year, the fifth double-digit decline in a row, according to data from the country's association of cement producers Oficemen.

Oficemen expects that the demand will also shrink by 20% in 2013, until it reaches the levels similar to those in Morocco and Ecuador. Spanish cement consumption was at a 48-year low after the first half of 2012.

Meanwhile, the Spanish cement and building materials producer Sociedad de Cementos y Materiales de Construccion de Andalucia, controlled by Portuguese cement group Cimpor, is negotiating the lay-off of 35 staff with its employees and trade unions. The proposed move will affect 25 staff at its plant in Cordoba and 10 employees at a factory in Niebla.

Brazil: A large report by Sindicato Nacional da Industria do Cimento (SNIC) has revealed that home consumption of cement has risen by 104% in Brazil since 2006. The report, carried out by Galanto Consultoria, showed that Brazilian families are carrying out more home improvement, resulting in a surge in demand for many building materials.

DIY consumption of cement rose from US$14m in 2002-2003 to US$28.8m in 2008-2009. Interestingly, the use of bricks fell from 6% to 4.6%, wood from 5.7% to 3.9% and tiling from 6.4% to 5.9% of total materials used over the same period. The president of SNIC, Jose Otavio Carvalho, said that DIY applications now represent 18.23% of the total consumption of cement in Brazil.

Overall cement consumption in Brazil has risen by 34% to U$1.7bn in 2011, up from US$1.3bn in 2006. The major regional consumer is the south east with a 40.2% share followed by the north east with a 25.5% share of national consumption.

SNIC estimates that Brazil produced 63.6Mt of cement in 2011, just shy of national demand of 64.6Mt. Imports made up the shortfall. The industry's installed capacity was estimated at 78Mt/yr at the end of 2011, with SNIC predicting an increase to 111Mt/yr by the end of 2015.

Nigeria: This week has seen a major development in the Nigerian cement industry, with a call from domestic manufacturers to ban cement imports, three months ahead of the government's schedule for the ban. The call has been presented in some quarters as proof that the country, long blighted by high cement imports, has achieved President Goodluck Jonathan's bold target of making Nigeria a net exporter of cement before 2013. In the face of steadily diminishing oil revenues the government would like Nigeria to be known as the regional cement exporter, but what else might happen?

According to the Cement Manufacturers' Association of Nigeria (CMAN), the country's total cement capacity now stands at 22.5Mt/yr. Domestic consumption is estimated at 18.5Mt/yr, translating into a required capacity utilisation rate of 82%. It is bizarre, therefore, that cement producers feel the need to call for an import ban. Perhaps:

a) The producers know that they can't compete with the low cost of imports from outside Nigeria,

b) The producers want to recoup their plant investment costs as quickly as possible,

c) The producers know that they can't export if the country continues to import.

With notoriously poor transport links within Nigeria, option c may be a small factor. If road and rail links are poor, transport costs increase and exports become less desirable for both the supplier and the end-user. What is more likely however, is a combination of a and b. Producers need to recoup their investments but can't if China and India can undercut them from thousands of miles away. If the desire to recoup investments goes unchecked when the import ban comes in, there is a high potential for cartel-like behaviour to surface again in the country.

One does not have to look back far to the last major incident of apparent cement market cartelisation in Nigeria. In mid-2011 President Jonathan had to step in and personally call for a 25% price reduction. His target was hit within three months, but since then prices have slowly started to rise again, even with Dangote's Ibese 6Mt/yr plant coming online just three months ago! With four producers committed to setting up a 3Mt/yr plant each by 2015 in exchange for 2011 import licences, the supply of cement in Nigeria will continue to rise, making the temptation to collaborate even stronger.