An overview of global cement sector · PDF fileAn overview of global cement sector trends Insights from the Global Cement Report 10th Edition ... Indonesia 128 Saudi Arabia 19 9 Egypt

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).


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


-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


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


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


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


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


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


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


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


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


-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


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


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


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


•  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


•   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


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


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?


•   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


2013 YTD – a mixed performance


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: [email protected] Website: www.cemnet.com

THE

GLOBALCEMENTREPORTTENTH EDITION


Thank you Thomas Armstrong Managing Editor International Cement Review Email: [email protected] Website: www.CemNet.com


Documents

An overview of global cement sector · PDF fileAn overview of global cement sector trends Insights from the Global Cement Report 10th Edition ... Indonesia 128 Saudi Arabia 19 9 Egypt