An overview of global cement

sector trends
Insights from the Global Cement Report 10th Edition
XXX Technical Congress
FICEM-APCAC
2 September, 2013
Lima, Peru

Thomas Armstrong
International Cement Review

Agenda
Review of global cement markets in 2012
Consumption, production, trade, capacity

Industry performance, capacity, prices, emerging

majors
Global growth scenarios and outlook
Focus on key markets & trends in 2013
Conclusions
Global cement industry trends

Global cement demand (1)

Global cement demand, 2002-2013E
4,500

12.0%

4,000
10.0%
3,500
8.0%

3,000
2,500

6.0%
2,000
1,500

4.0%

1,000
2.0%
500
0

0.0%
2002

2003

2004

2005

2006

Demand (Mt)

2007

2008

% Change

2009

2010

2011

2012 2013E

Linear (% Change)

Global volumes have doubled over the last decade, from 1.8bnt in
2002 to 3.7bnt in 2012, reflecting a CAGR of 7.4%.
Compares to a CAGR of 4.3% in the previous decade (1992-2002).
Global cement industry trends

Regional economic growth trends

GDP Growth, World Regions, 2002-2017E
20

World
15
Advanced economies

% Change

10

European Union

Emerging market and

developing
economies
Latin America and the
Caribbean

China

-5

-10

Global cement industry trends

Global cement demand (2)

Evolution of cement demand 2002-2013E
4,500
4,000
3,500
(Mn Mt)

3,000
2,500
2,000
1,500
1,000
500
0
2002

2003

2004

2005

2006

Mature Markets

2007

2008

2009

Emerging Markets

2010

2011

2012 2013E

China

Global cement demand is dominated by China (39% in 2002 vs 58% in

2012)
Steady growth in emerging markets
Mature markets entered into a period of contraction from 2008
Global cement industry trends

Regional consumption
2012

2002

0%

0%

6%
3%

13%

3%
4%

Western Europe
4%

Central & Eastern Europe

North America
8%

5%

South&Central America
Africa

47%

8%

Indian Sub-Continent
4% Middle East
South Asia
5%

61%

5%

North Asia
Australasia

5%

7%
5%

5%

Global cement industry trends

Top 15 cement consumers

Top Consumers, 2012

2160
350
300

(Mt)

250

242

200
150
100
50

79

69

63

59

58

55

53

51

46

44

43

35

27

Global cement industry trends

Rank by volume
China
India
USA
Brazil
Russia
Iran
Turkey
Indonesia
Saudi Arabia
Egypt
Vietnam
South Korea
Japan
Mexico
Germany

2002
1
2
3
8
9
14
15
12
19
13
18
5
4
10
11

2012
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Per capita consumption

Per capita consumption, selected countries (kg)
1,800 1,683
1,581
1,600
1,400
1,200
1,000
800

911
770 744
616

600
400

560 554 546 524

498 489

438 402
367 342 330 329 327
300

200

232 202 191

129 108

Global cement industry trends

Per capita consumption - LatAm

Per capita consumption, LatAm v World (kg)
450
400
350
300

600
388
500

330
294

286

281

265

255

252

250

400
231

227

222

217

300

200
150

200

100
100
50
0

Global cement industry trends

10

Top 15 cement producers

Top producers, 2012

2220
300
247
250

(Mt)

200
150
100

74

73

69

68

60

59

55

53

50

53

49

47

37

32

Global cement industry trends

11

Top 10 importers & exporters, 2012

4Mt
8Mt
4Mt
7Mt

13Mt

6Mt

11Mt

14Mt
11Mt
9Mt

12Mt
8Mt

9Mt

4Mt

96%

Importer
Exporter

Non trade

5Mt
11Mt

4Mt

4%

10Mt

8Mt
5Mt

Total of 167Mt traded in 2012 (4% of prod.)

Top 20 exporters account for 85% of exports

Trade
Global cement industry trends

12

Contracted capacity, 1990-2012

160

Asia (excl. China & India)

India
Russia
Europe
North America
Latin America
MiddleEast
Africa

140
120

(Mt)

100
80
60

Contracted capacity by
region, 2011, Mt
12
10
8
6
4
2
0

40

11.2
8.9 9.2

7.4
5.4

4.1
0.0 0.0

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

20

140Mt of new kiln capacity contracted at peak in 2006 (ex-China)

46Mt contracted in 2011, with no new projects in North America and
Western Europe, falling to 40Mt in 2012
Global cement industry trends

13

Leading companies
Cement capacities of leading producers, 2012
(Mta)
400
350

343

300
250

218 217 209

200
150
100

114

96

81

65

58

54

45

50

38

35

31

23

23

19

16

Global cement industry trends

14

Top 6 company performance

Top 6 Majors, Sales Volumes - YoY Change (%),

2006-2013 (1H)
30.0
Holcim

YoY Change (%)

20.0

Lafarge
10.0

Heidelberg

0.0
2006 2007 2008 2009 2010

2011 2012

-10.0

1H
2013

Cemex
Italcementi
Buzzi Unicem

-20.0
-30.0

Net capacity change (Mt), Top 6 Majors, 2005-2012

60.0
50.0

(Mt)

40.0
30.0
20.0
10.0

Global majors hit by

collapse of demand in
key markets from 2008
High debt levels and
financial inflexibility
resulted in a severe
slowdown in capex,
M&A, opening up
opportunities to the
emerging majors
Companies now
readjusting to new
economic realities (ie
Cemex/Holcim deal)
Votorantim overtakes
Buzzi Unicem as sixth
largest international
company following
Cimpor deal

0.0
2005

2006

2007

2008

2009

2010

2011

2012

Global cement industry trends

15

Global growth scenarios

5-Yr
CARG
07to12 12to17
4.3%
6.2%

World
% Change

2011
3,585
8.3%

2012
3,730
4.0%

2013E
3,967
6.3%

2014F
4,157
4.8%

2015F
4,310
3.7%

2016F
4,464
3.6%

2017F
4,599
3.0%

China
% Change

2,050
10.8%

2,160
5.4%

2,333
8.0%

2,438
4.5%

2,511
3.0%

2,586
3.0%

2,638
2.0%

10.4%

4.1%

World Ex-China
% Change

1,535
5.0%

1,570
2.3%

1,634
4.1%

1,719
5.2%

1,799
4.6%

1,878
4.4%

1,961
4.4%

1.7%

4.5%

Mature Markets 422.35

% Change
2.5%

406.63
-3.7%

407.87
0.3%

417.02
2.2%

430.43
3.2%

442.21
2.7%

454.81
2.8%

-5.5%

2.3%

EM ex-China
% Change

1,164
4.6%

1,226
5.4%

1,302
6.2%

1,368
5.1%

1,436
4.9%

1,506
4.9%

5.2%

5.3%

1,113
6.0%

Global cement industry trends

16

Per capita consumption

Cement consumption vs GDP, per capita, 2011
1200
Libya

1000
Cement consumption per capita (kg)

South Korea

Iran

800

600

Turkey

Vietnam
Egypt
Morocco
Iraq

Poland

Portugal
Spain

Russia
Thailand

400

Peru

Hong Kong

Czech Republic

Germany

Brazil
Mexico

Japan

Indonesia
South Africa

200

USA
United Kingdom

Nigeria
Kenya

0
0

10,000

20,000

30,000

40,000

50,000

60,000

GDP per capita (US$)

Global cement industry trends

17

United States in recovery

Annual value of construction
put in place (YoY % change)

Cement consumption, USA,

2002-2017F

40

-30%

20

-40%

Total Construction

2012

-20%

2011

60

2010

-10%

2009

0%

2008

10%
2007

104
93 99

2006

87
79 81
69 70 72

2005

80

94

2004

100

20%

2003

120

30%

2002

140

127 122
120
111 115
111

Residential

Nonresidential

2011
2012

'000 units

9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

1,200
1,000
800
600
400
200
0

2013

Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul

New residential construction,

Jul '12 to Jul '13

Monthly cement consumption, USA,

2011-13 (Mt)

Starts

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Global cement industry trends

Under construction

Completions

18

Brazil growth weakens

Monthly cement consumption,
Brazil, 2012-13YTD (Mt)

100
80
60
40

41 45
39 39 38
34 34 37

52 52

75 78
69 71
65
60

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

20

7.000
6.000
5.000
4.000
3.000
2.000
1.000
0.000

Annual cement consumption, Brazil, 2001-2015F

(% Change YoY)
20%

16%

14%

15%

11% 11%

8%

7%

10%
2%

5%

1%

7%
3%

5% 5%

0%
-5%

-2% -3%

-10%
-15%

-10%

Global cement industry trends

2012
2013

Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

Annual cement consumption, Brazil,

2001-2015F (Mt)

Per capita consumption

reached 330kg
Huge infrastructure and
housing requirements
82Mt domestic capacity
33Mt new capacity
planned between 2012-16
Capacity to reach 110Mt in
2015 risk of surplus

19

Spain hope in sight?

Apparent consumption,
Spain, Monthly, 2010-13 YTD

Spanish consumption, 2002-15F

56 56
48 51
44 46

20%
10%

2.5

0%

2.0

-10%

1.5

-20%

1.0

10

-30%

0.5

-40%

0.0

50
40

43
29

30

24

20

20

14

Consumption (mt)

11

10

11

2011

YoY Change

5.0
0.0
2005 2006 2007 2008 2009 2010 2011
-5.0
-10.0

Total Building
Total Civil Works
Total Construction

2013

Cement price index, Spain,

1996-2011

Evolution of construction in Spain, YoY %

change, 2005-2011
10.0

2012

160
150
140
130
120
110
100

Base 100 1989

1996
1998
2000
2002
2004
2006
2008
2010

60

-15.0
-20.0

Global cement industry trends

20

Russia growth moderating

Annual cement consumption, Russia, 2002-2015F
80
67

70
61
60

40

61

57
49

46
36

39

73

63

52

50

70

44

42

20%
15%
10%
5%
0%
-5%
-10%

30

-15%

20

-20%
-25%

10

-30%
-35%

0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consumption (Mt)

YoY Change (%), R/H column

Recovery from 2009 crisis complete, with double digit growth between
2010-12. Economy slowing and demand softening.
Per capita consumption below average at 402kg
80% capacity utilises wet process technology
23Mt of new capacity planned by 2015
Potential capacity shortages by 2020
Global cement industry trends

21

India below expectations

Annual cement consumption, India, 2001-2016F
350
300
250
200
150
100

90

111 117 123

136

152

166 174

193

206

222 232

248

266

288

312 25%
20%
15%
10%
5%

50
0

0%

Consumption (Mt)

YoY Change (%), R/H column

Projections for the Indian cement industry,

FY12/13-2016/17
Financial year Cement
Capacity
Consumption
capacity (Mta) change (%) (Mt)
2012-13
349.6
265.4
2013-14
374.9
7%
292.6
2014-15
405.1
8%
324
2015-16
440.6
9%
358.9
2016-17
479.3
9%
397.4

10%
11%
11%
11%

GDP growth slips below 5%

(lowest rate in decade), as
demand growth weakens
Capacity doubled since 2007
to 350Mta (2012)
Improving capacity utilization
(73%), but additional 130Mt
capacity planned over current
5-yr plan (2013-17)
Land acquisition,
environmental permitting,
slower demand will slow
aggressive expansion plans
Per capita consumption very
low at only 191kg vs 513kg
global average
AFR usage only 1%

Source: Planning Commission, India

Global cement industry trends

22

China - resetting to sustainable course?

Annual cement consumption, China, 2001-2015F
25%

3,000
2,333

2,500
2,050

2,438 2,511

2,160

1,850

2,000
1,600
1,500
1,000

20%

719

857

976

1,059

1,200

15%

1,320 1,372
10%
5%

500

0%

0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Consumption (Mt)

YoY Change (%), R/H column

Growth tripled from 720Mt in 2002 to 2.16bnt in 2012 (CAGR11.6%)

58% of global consumption
Per capita consumption reached 1518kg in 2012 (x3 global av.)
Future growth reset to more sustainable course, with CAGR 4% over 2012-17F
Demand is expected to peak this decade, after which per capita levels will gradually
revert toward average global levels
Overcapacity, intense competition, low utilization rates impacting on profitability
Global cement industry trends

23

2013 YTD a mixed performance

Cement market indicators, selected countries, 1H13
25%
20%

19%
13%

15%

11% 10%

10%

9%

7% 7% 7%
3%

5%

1% 0%

0%
0% -1%
-2%

-5%

-3%
-7% -8%

-10%
-15%

-13%

-20%

-18%

-25%

Global cement industry trends

Spain

Poland

Italy

Morocco

Germany

France

Egypt

Mexico

Colombia

UK

USA

Brazil

India

Russia

Argentina

Indonesia

Saudi Arabia

China

Peru

Nigeria

Turkey

-30%

-23%-24%

24

Global Cement Report 10th Edition

New 2013 edition out now

THE

GLOBAL
CEMENT
REPORT
TENTH EDITION

Fully revised and updated

10th Edition released in 2013
Available now!
Includes:
Cement statistics: 1990-2012
165 country profiles
World summary
Forecasts 2013-14
22-year database
Published by ICR

Email: subscribe@cemnet.com
Website: www.cemnet.com

Global cement industry trends

25

Thank you
Thomas Armstrong
Managing Editor
International Cement Review
Email: t.armstrong@cemnet.com
Website: www.CemNet.com

Global cement industry trends

26