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Global demand for cement to dip this year

Worldwide cement consumption is expected to take a slight dip this year on the back of slowdowns in the Middle East, China and Africa, forecasts CW Research’s 2H2018 update of the Global Cement Volume Forecast Report (GCVFR).

The global consumption for 2018 is projected to settle at 4.05 billion tons, said the update, with the advanced markets, such as the US and Western Europe, offsetting the slide in the developing economies.

According to the research, cement consumption in the Middle East is likely to decline this year with the two major producers and consumers in the region – Saudi Arabia and Iran – continuing to struggle with low demand and overcapacity. A recovery is expected in the next five years, with rising crude oil prices and stronger government revenues propping up regional cement consumption, the research added.

The forecast for China is on similar lines for this year, with lack of investment in the real estate and infrastructure sectors dragging down demand for cement. The country’s market is expected to consume 2.55 billion tons of cement this year, a fall of around 3% compared to last year. According to the research, this is because the Chinese economy is now maturing and approaching a stage that the developed economies achieved around three decades ago, when demand for cement started to plateau out.

CW Research has also revised its forecast for the African market downwards for 2018 due to slow growth in 2018. With this year’s figures negatively impacted by the Egyptian, Tunisian and Kenyan markets returning lower performances than expected, consumption for the continent as a whole will only edge up by 1.6%. Meanwhile, the average yearly growth through to 2023 is projected at 3.6%.

Raluca Cercel, associate at CW Group, said: “The global economy has been accelerating since the beginning of 2018, but the recent improvements in growth remain unevenly distributed across countries and regions.

“Economic prospects for many commodity exporters remain particularly challenging, and fears of future disruption to trade could lead government-driven economies to postpone investments, while higher oil prices could filter through to cramp consumer spending.”

The US remains a bright spot and CW Research expects cement demand to grow by 2.8% on a cumulative annual growth average in the country

“US cement demand is being propelled by an increasing consumer spending, which is reflecting on growing residential construction. Nevertheless, the ambitious infrastructure plans envisaged by the Trump administration remain on hold, translating into a lacklustre increase in cement demand,” said Robert Madeira, CW Group’s managing director and head of research.

Demand in Western Europe is expected to increase by around 3% year-on-year in 2018, while maintaining an average growth of 2.2% for the period between 2018 and 2023. Meanwhile, the Latin American cement market is expected to recover in 2018 after consecutive years of decline. The research forecast growth to accelerate in the next five years as the regional economy recovers.

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