Displaying items by tag: Forecast

India: ACC forecasts that demand for cement will grow by up to 7% in 2018. However, intense competition and insufficient consumption will lead to excess capacity it added, according to the Press Trust of India. Demand is expected to benefit from government-based infrastructure projects, rural development and affordable housing schemes.

Around 66% of ACC’s cement demand came from the housing sector, followed by infrastructure with 18% and 16% from the commercial sector. The country has a total cement production capacity of 465Mt/yr but it is only producing 305Mt/yr, giving it an utilisation rate of 66%. Cement plants in the south of the country are pulling the rate down compared to northern, central and eastern regions. Excess capacity is expected to continue until 2019, with the increased outlays on housing, infrastructure development and agricultural sector initiatives.

US: The Portland Cement Association (PCA) predicts growth of 2.8% in cement consumption in 2018 and 2019 in its Spring Forecast. Growth is then expected to climb to 4% in 2020 as impacts from potential federal infrastructure spending are likely to take effect. The analysis estimates cement consumption at 99.3Mt in 2018, 102.1Mt in 2019 and 106Mt in 2020.

Ed Sullivan, PCA senior vice president and chief economist, has attributed the forecast growth to a variety of positive economic factors including a strong economy, job market and anticipated increase in infrastructure spending. He said that in combination these factors, “suggest a modest acceleration in real GDP, construction markets and cement consumptions.”

However, the PCA projects that ‘robust’ infrastructure spending isn’t likely to occur until the fourth quarter of 2019, given the key steps that must occur, including passage of an infrastructure bill, federal and state paperwork, bid letting and review and finally contract awards leading to construction.

India: The credit agency ICRA forecasts that cement demand will grow by 4.5% in the 2018 – 2019 financial year due to growth in the housing sector and higher infrastructure spending. Improved rural incomes, higher rural credit and increased allocation for rural, agriculture and allied sectors are also likely to increase the demand for rural housing, according to the Press Trust of India.

Indian cement production rose by 2.7% to 217Mt in the nine months from April to December 2017 from 211Mt in the previous year. However, the first three months of this period, from April to June 2017, saw production drop due to local issues across the country such as a sand shortage, the implementation of Real Estate Regulatory Authority (RERA) Act and a drought. The following quarter then saw a fall in production due to the introduction of the Goods and Services Tax (GST), continued sand shortages and inclement weather. ICRA predicts that cement demand will grow by 3% for the remainder of the 2017 – 2018 financial year due to a boost in production in December 2017.

US: Ed Sullivan, the Portland Cement Association’s (PCA) Senior Vice President and Chief Economist says that economic momentum supported by tax reform and federal infrastructure programs will play key roles in the demand for construction in the next few years. Sullivan made his comments at the World of Concrete event in Las Vegas, where he revealed details from his forthcoming spring forecast.

“There is little doubt that the near-term outlook for construction and cement consumption in 2018 and 2019 remains favourable,” said Sullivan. “Strengthening economic conditions, with the addition of fiscal stimulus, and in the context of already low unemployment could awaken inflationary pressures. Down the road, this could lead to an even more stringent monetary policy, leading to an acceleration in interest rate increases and an eventual cooling of construction markets. If this scenario plays out, it will likely take time to gestate and not materialise to a significant degree until after 2019.”

Sullivan noted the strong economy comes in context of continued strain to find skilled workers, including those needed for construction projects. Weather conditions and other economic factors prompted PCA to revise its 2017 Fall Forecast down slightly, though it says that its ‘fundamental’ assessments pertaining to the economy, construction markets, and cement consumption remain on target.

The PCA Spring Forecast will be released in early March 2018.

Indonesia: Semen Indonesia forecasts that domestic cement consumption will grow at a rate of 5 – 7% year-on-year in 2018, a lower rate than the level of 7.8% recorded for the first 11 months of 2017. Semen Indonesia corporate secretary Agung Wiharto said that the prediction was based on continued demand for cement from government infrastructure projects, according to the Jakarta Post. The company also took other factors - such as inflation, political stability and market confidence - into account in its sales projection. Indocement has also forecast a cement consumption growth rate of 5 – 6% in 2018. Both companies reported reduced earnings in the third quarter of 2017.

India: The credit agency ICRA forecasts that rising energy and freight costs due to higher pet coke, coal and diesel prices during the first half of 2017 – 2018 financial year may hit the profits of cement producers. Petcoke prices grew by 32% year-on-year in the first half of the year and coal prices rose by 44%, according to the Press Trust of India. Sabyasachi Majumdar, an analyst at ICRA, said that higher power, fuel and freight costs were likely to continue. He added that the ability of cement companies to raise their prices was crucial to maintaining profit levels.

Mozambique: Ambrian, the UK-based owner of the Cimentos da Beria grinding plant, forecasts that its sales will rise by 25% year-on-year in 2017 from 2016. The prediction follows a poor third quarter where sales volumes fell by 16% and the company described the economic conditions in the country over the past year as ‘challenging.’ The group added that it has seen cement prices improve year-on-year and that the plant in Beira is now generating positive earnings before interest, taxation, depreciation and amortisation (EBITDA).

However, Ambrian also reported that it is facing ‘urgent’ short-term liquidity issues owing to difficulties in moving cash resources held within the group to the company. It is currently trying to secure short term financing and a longer-term strategic partnership and investment for the group as a whole to allow it to reduce its debt and develop its business in Mozambique.

India: ICRA is expecting cement demand is pick up in the fourth quarter of the 2017 – 2018 financial year following weak real estate activity, sand shortage and Goods and Service tax (GST) implementation issues in the first half of the year. In its October 2017 update the credit ratings agency said that demand was expected to benefit from the housing sector and road and irrigation projects in the infrastructure sector, according to the Press Trust of India. It added that the profitability of the industry depends on the industry’s ability to control prices given that higher input costs for fuel and freight are expected.

The credit ratings agency said that cement demand remained subdued across the country due to various local issues. In the North, especially in the states of Uttar Pradesh and Punjab, the offtake had been impacted by a sand shortage and lack of labour. In the West the implementation of the Real Estate Regulatory Authority (RERA) Bill resulted in construction activity slowing down. In the South, Tamil Nadu and Kerala were hit as demand was affected by the sand shortage, drought impacting rural offtake and weak housing activity. A recent ban on sand mining in Bihar is also likely to reduce sales volume growth in the eastern region in coming months.

US: The Portland Cement Association (PCA) has downgraded its forecast for cement consumption in 2017 and 2018 due to bad weather and lower anticipated budgets for the public construction sector. The association now expects cement consumption to rise by 2.6% in 2017 and 2.8% in 2018. It previously anticipated a 3.5% growth rate for both years in a statement made in May 2017.

“Once infrastructure and tax reform initiatives take hold and affect economic and construction activity, then we can expect growth in cement consumption to accelerate to higher levels,” said Ed Sullivan, PCA senior vice president and chief economist.

Sullivan noted the updated forecast assumes tax reform and a US$250bn national infrastructure program spearheaded by the Trump Administration and the House of Congress. However these initiatives are unlikely to begin until mid-2019. He added that the dual fiscal stimuli would accelerate GDP growth, construction spending and cement consumption. Lowering unemployment rates are also expected to add to inflationary pressures alongside these fiscal programs.

The PCA said that rising inflation would necessitate a stronger Federal Reserve reaction and is expected to result in a rapid and perhaps larger-than-expected increase in interest rates. This, in turn, could cause a slowdown in the construction industry leading to a potential decline in activity from the end of 2021.

India: The credit ratings agency ICRA has downgraded its forecast for cement demand growth to 3.5 – 4% for the 2017 - 2018 financial year due to a slow first half of the year. It blamed the slow first half on a sand shortage in some regions, the implementation of the Real Estate Regulatory Authority and slowed construction activity in the west, according to the Press Trust of India. The agency expects demand to be subdued during the second quarter of the year due to weather and the implementation of the Goods and Services Tax (GST).

However, it forecasts demand to rebound afterwards as housing demand and infrastructure projects pick up. In July 2017 the agency had predicted a growth rate of 5%.