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Sri Lankan cement demand grows to 2021

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World Cement,

Cement demand in Sri Lanka will moderate over the next five years, according to a new report from CW Research, following average growth of 13% between 2010 and 2016. Cement demand reached 7 million t in 2016.

The 2010 – 2016 boom in demand came on the back of significant investment in infrastructure, driven by an urgent need for reconstruction work after the end of the long-running civil war in 2009. Since 2015, however, demand has started to slow as corruption concerns saw the suspension of large-scale infrastructure work.

There remains a “long-term and latent need for cement” in the country, said Robert Madeira, CW Managing Directory and Head of Research, pointing to the significant amount of work still to be done. “The challenge will be find the fiscal strength to implement projects.”

Sri Lanka also faces supply challenges, having to import substantial amounts of cement and clinker. This has pushed the country to become the fourth-largest importer of cement in the world. Principal suppliers include India, Pakistan, Indonesia, Malaysia, and Vietnam.

This situation is likely to continue, noted CW Research, as no new integrated cement production capacity has been announced. Cement grinding capacity is expected to increase by 14% by 2021.

“Poor limestone availability in the country to limiting the ability to effectively put in place domestic clinker production lines, leaving manufacturers subject to the fluctuations of clinker prices imported from India and Vietnam,” said Raluca Cercal, Senior Analyst with CW Research. “This said, exploration work continues and the search is on for quality limestone.”

Between 2016 and 2021, cement consumption will be supported by infrastructure projects and growing housing demand. Construction is expected to grow at an annual average of 8% over the next few years.

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