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An overview of global cement sector trends
Insights from the Global Cement Report 10th Edition
Thomas Armstrong International Cement Review
XXX Technical Congress FICEM-APCAC
2 September, 2013 Lima, Peru
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 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
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E
Global cement demand, 2002-2013E
Demand (Mt) % Change Linear (% Change)
Regional economic growth trends
Global cement industry trends 5
-10
-5
0
5
10
15
20 %
Cha
nge
GDP Growth, World Regions, 2002-2017E
World
Advanced economies
European Union
Emerging market and developing economies Latin America and the Caribbean
China
Global cement demand (2)
• 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
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E
(Mn
Mt)
Evolution of cement demand 2002-2013E
Mature Markets Emerging Markets China
Regional consumption
Global cement industry trends 7
6% 3%
3% 4%
5%
8%
5%
5%
61%
0%
2012
13%
4%
8%
4%
5%
7%
5% 5%
47%
0%
2002
Western Europe
Central & Eastern Europe
North America
South&Central America
Africa
Indian Sub-Continent
Middle East
South Asia
North Asia
Australasia
Top 15 cement consumers
Global cement industry trends 8
2160
242
79 69 63 59 58 55 53 51 46 44 43 35 27
0
50
100
150
200
250
300
350
(Mt)
Top Consumers, 2012 Rank by volume 2002 2012China 1 1India 2 2USA 3 3Brazil 8 4Russia 9 5Iran 14 6Turkey 15 7Indonesia 12 8Saudi Arabia 19 9Egypt 13 10Vietnam 18 11South Korea 5 12Japan 4 13Mexico 10 14Germany 11 15
Per capita consumption
Global cement industry trends 9
1,683 1,581
911 770 744
616 560 554 546 524 498 489 438 402 367 342 330 329 327 300 232 202 191
129 108
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Per capita consumption, selected countries (kg)
Per capita consumption - LatAm
Global cement industry trends 10
388
330 294 286 281 265 255 252
231 227 222 217
0
100
200
300
400
500
600
0
50
100
150
200
250
300
350
400
450
Per capita consumption, LatAm v World (kg)
Top 15 cement producers
Global cement industry trends 11
247
74 73 69 68 60 59 55 53 53 49 47 37 32
0
50
100
150
200
250
300
(Mt)
Top producers, 2012 2220
Importer Exporter
Top 10 importers & exporters, 2012
Global cement industry trends
7Mt 6Mt
11Mt
5Mt
4Mt
4Mt
8Mt
5Mt
10Mt
9Mt 8Mt
11Mt 14Mt
12Mt
13Mt
11Mt
• Total of 167Mt traded in 2012 (4% of prod.) • Top 20 exporters account for 85% of exports
96%
4%
Non trade Trade
12
4Mt
4Mt
9Mt
8Mt
Contracted capacity, 1990-2012
• 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
11.2
7.4
4.1
0.0 0.0
5.4
8.9 9.2
0 2 4 6 8
10 12
Contracted capacity by region, 2011, Mt
13
0
20
40
60
80
100
120
140
160 19
90
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
(Mt)
Asia (excl. China & India) India Russia Europe North America Latin America MiddleEast Africa
Leading companies
Global cement industry trends 14
343
218 217 209
114 96 81 65 58 54 45 38 35 31 23 23 19 16
0
50
100
150
200
250
300
350
400
Cement capacities of leading producers, 2012 (Mta)
Top 6 company performance • 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
Global cement industry trends 15
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
2006 2007 2008 2009 2010 2011 2012 1H 2013
YoY
Cha
nge
(%)
Top 6 Majors, Sales Volumes - YoY Change (%), 2006-2013 (1H)
Holcim
Lafarge
Heidelberg
Cemex
Italcementi
Buzzi Unicem
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2005 2006 2007 2008 2009 2010 2011 2012
(Mt)
Net capacity change (Mt), Top 6 Majors, 2005-2012
Global growth scenarios
Global cement industry trends 16
2011 2012 2013E 2014F 2015F 2016F 2017F
5-Yr CARG 07to12 12to17
World 3,585 3,730 3,967 4,157 4,310 4,464 4,599 6.2% 4.3%% Change 8.3% 4.0% 6.3% 4.8% 3.7% 3.6% 3.0%
China 2,050 2,160 2,333 2,438 2,511 2,586 2,638 10.4% 4.1%% Change 10.8% 5.4% 8.0% 4.5% 3.0% 3.0% 2.0%
World Ex-China 1,535 1,570 1,634 1,719 1,799 1,878 1,961 1.7% 4.5%% Change 5.0% 2.3% 4.1% 5.2% 4.6% 4.4% 4.4%
Mature Markets 422.35 406.63 407.87 417.02 430.43 442.21 454.81 -5.5% 2.3%% Change 2.5% -3.7% 0.3% 2.2% 3.2% 2.7% 2.8%
EM ex-China 1,113 1,164 1,226 1,302 1,368 1,436 1,506 5.2% 5.3%% Change 6.0% 4.6% 5.4% 6.2% 5.1% 4.9% 4.9%
Per capita consumption
Global cement industry trends 17
0
200
400
600
800
1000
1200
0 10,000 20,000 30,000 40,000 50,000 60,000
Cem
ent c
onsu
mpt
ion
per c
apita
(kg)
GDP per capita (US$)
Cement consumption vs GDP, per capita, 2011
USA United Kingdom
Libya
Spain
South Korea
Japan
Iran
Egypt
Turkey
Czech Republic
Portugal
Hong Kong
Germany
Iraq
Russia Thailand
Poland Morocco
Vietnam
Indonesia
Peru Mexico Brazil
South Africa
Kenya Nigeria
United States in recovery
Global cement industry trends 18
111 115 120 127 122 111
94
69 70 72 79 81 87 93 99 104
0 20 40 60 80
100 120 140
Cement consumption, USA, 2002-2017F
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Monthly cement consumption, USA, 2011-13 (Mt)
2011
2012
2013
-40% -30% -20% -10%
0% 10% 20% 30%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Annual value of construction put in place (YoY % change)
Total Construction Residential
Nonresidential
0 200 400 600 800
1,000 1,200
Jul
Aug
S
ep
Oct
N
ov
Dec
Ja
n Fe
b M
ar
Apr
M
a y
Jun
Jul
'000
uni
ts
New residential construction, Jul '12 to Jul '13
Starts Under construction
Completions
Brazil – growth weakens
Global cement industry trends
• 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
39 39 38 34 34 37 41 45 52 52 60 65 69 71 75 78
0
20
40
60
80
100
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Annual cement consumption, Brazil, 2001-2015F (Mt)
-2% -3%
-10%
2% 7%
11% 11% 14%
1%
16%
8% 7% 3%
5% 5%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Annual cement consumption, Brazil, 2001-2015F (% Change YoY)
0.000 1.000 2.000 3.000 4.000 5.000 6.000 7.000
Jan
Feb
Mar
A
pr
May
Ju
n Ju
l A
ug
Sep
O
ct
Nov
D
ec
Monthly cement consumption, Brazil, 2012-13YTD (Mt)
2012
2013
Spain – hope in sight?
Global cement industry trends -20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
2005 2006 2007 2008 2009 2010 2011
Evolution of construction in Spain, YoY % change, 2005-2011
Total Building
Total Civil Works
Total Construction 100 110 120 130 140 150 160
1996
19
98
2000
20
02
2004
20
06
2008
20
10
Cement price index, Spain, 1996-2011
Base 100 - 1989
20
0.0
0.5
1.0
1.5
2.0
2.5
Apparent consumption, Spain, Monthly, 2010-13 YTD
2011 2012 2013
44 46 48 51 56 56
43
29 24
20 14 11 10 11
-40%
-30%
-20%
-10%
0%
10%
20%
0
10
20
30
40
50
60
Spanish consumption, 2002-15F
Consumption (mt) YoY Change
Russia – growth moderating
Global cement industry trends
• 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
21
36 39 42
46 52
61 61
44 49
57 63
67 70 73
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
0
10
20
30
40
50
60
70
80
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Annual cement consumption, Russia, 2002-2015F
Consumption (Mt) YoY Change (%), R/H column
India – below expectations
Global cement industry trends
90 111 117 123 136 152 166 174
193 206 222 232 248 266
288 312
0%
5%
10%
15%
20%
25%
0
50
100
150
200
250
300
350
Annual cement consumption, India, 2001-2016F
Consumption (Mt) YoY Change (%), R/H column
Projections for the Indian cement industry, FY12/13-2016/17 Financial year Cement
capacity (Mta) Capacity change (%)
Consumption (Mt)
2012-13 349.6 265.4 2013-14 374.9 7% 292.6 10%2014-15 405.1 8% 324 11%2015-16 440.6 9% 358.9 11%2016-17 479.3 9% 397.4 11%
Source: Planning Commission, India
• 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%
22
China - resetting to sustainable course?
Global cement industry trends
• 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
23
719 857
976 1,059 1,200
1,320 1,372 1,600
1,850 2,050 2,160
2,333 2,438 2,511
0%
5%
10%
15%
20%
25%
0
500
1,000
1,500
2,000
2,500
3,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Annual cement consumption, China, 2001-2015F
Consumption (Mt) YoY Change (%), R/H column
2013 YTD – a mixed performance
Global cement industry trends 24
19%
13% 11% 10% 9%
7% 7% 7%
3% 1% 0%
0% -1% -2% -3% -7% -8%
-13%
-18%
-23% -24% -30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Turk
ey
Nig
eria
Per
u
Chi
na
Sau
di A
rabi
a
Indo
nesi
a
Arg
entin
a
Rus
sia
Indi
a
Bra
zil
US
A
UK
Col
ombi
a
Mex
ico
Egy
pt
Fran
ce
Ger
man
y
Mor
occo
Italy
Pol
and
Spa
in
Cement market indicators, selected countries, 1H13
Global Cement Report 10th Edition New 2013 edition out now
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
THE
GLOBALCEMENTREPORTTENTH EDITION
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
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