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
3
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
4
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
5
0
China
-5
-10
Global cement industry trends
5
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
6
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
7
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
0
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
8
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
0
Global cement industry trends
9
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
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
0
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
0
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
0
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%
0
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
0
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
0
-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