Boutique research firm, CW Group, recently released its World Cement Equipment Market and Forecast Report 2018, highlighting a number of trends it sees shaping the industry over the years to 2022. Headlining the report, CW Group sees the market for cement manufacturing related equipment and services reaching US$9 billion by the end of the forecast period. That headline number however masks a continued softness in the market for new capacity: upgrades and spares, as well as what CW Group refers to as ‘functional’ equipment and services, will be the growth drivers.
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That is not particularly surprising: the global cement industry remains under a cloud of quite substantial overcapacity and – barring a few brighter spots (Pakistan and India, for example) – cement companies are simply not building new plants. An interesting effect of this, however, is the narrowing of the traditional pricing gap between Western and Chinese suppliers.
According to CW Group, “turnkey Western equipment producers, such as FLSmidth, thyssenkrupp, or KHD Humboldt Wedag, are becoming increasingly competitive with Chinese suppliers, including Sinoma and CNBM and their sub-units.” As a result, Western suppliers are reclaiming market share outside of China.
It is not simply a story of Western suppliers reducing prices, however, as Raluca Cercel, Associate with CW Group, explained. “Chinese equipment providers are aiming to raise the quality of their equipment. This market approach caters to an increasingly discerning end user, driven by concerns, such as quality and value of the equipment, but also its user-friendliness and flexibility. The combination of this consumer trend with the rise of labour costs [in China] is expected to result in a gradual increase in prices.”
Consumer demand is also driving growth in the ‘functional’ equipment market, within which CW Group includes automation, control, environmental, and testing equipment and services.
Cement manufacturers are aiming at “achieving higher efficiency and reducing operating costs,” said Robert Madeira, CW Group’s Managing Director and Head of Research. “As a result, more technology-intensive functions, such as automation, control, and testing, are becoming more prominent and representing an ever-growing share of the cement plant equipment spend mix.”
Growth is also anticipated in the upgrade and spares segments, “underpinned by cement manufacturer’s shifting capital expenditure and strategic priorities.” Globally, CW Group expects the upgrades and spares segments to expand the fastest, reaching close to US$5 billion.
What then to conclude from this? Although the cement equipment market looks likely to remain tough over the forecast period, it is not without opportunities. It will favour the innovative: those that take advantage of the changing competitive balance between Western and Chinese companies; those that can meet the more discerning quality standards of the customer; and those that can offer the advanced technologies needed to achieve customers’ efficiency, environmental, and cost goals.
World Cement is also keeping up with these trends with around half of the technical features in each month dedicated to operational, maintenance, or environmental topics. As always, do contact me with projects in these areas that might be suitable to feature in the magazine. I can be reached by email (firstname.lastname@example.org) or connect with us via our social media channels. I hope you enjoy this month’s issue!