The World Cement Association (WCA) has reported that it expects global cement demand growth to slow in 2019. This comes as the positive outlook and signs of recovery seen in 2H16 started to fade away in the face of rising downside risks in 2Q18.
The WCA has forecast that global cement demand will grow by 1.5% in 2019. It has stated that China’s dwindling needs are a significant factor, but, excluding that, overall demand will rise by only 2.8% in 2019. This lags behind the levels of global economic growth anticipated by the IMF.
A serious setback for global growth has been caused by escalating trade wars between the US and China, as well as its disruptive spill-over impact. Economic growth expectations have also deteriorated in developed markets, on the back of higher trade costs and tightening financial policies, as well as in major emerging markets due to higher borrowing costs, vulnerable exchange rates, and reduced capital inflow.
The WCA expects the US cement market to grow at a moderate pace, around 3% lower than that seen in 2018. The association has stated that this is expected after the upside associated with the Trump administration’s large infrastructure investments failed to materialise.
Construction confidence indicators are losing momentum and activity is slowing down in key European countries, such as Germany and France. For Germany, cement demand is expected to remain flat, while French cement market growth is projected to remain steady at its 2018 level of 3%. The association has stated that Italy’s cement demand is limited due to rising political risks, and construction confidence is in decline. Major positive news for Europe is Spain’s strong cement recovery, with the market expected to grow by 10%.
Representing more than 50% of world cement demand, China’s economic slowdown continues and the country’s cement market is stagnant. The WCA expects demand to grow by only 0.5% in 2019.
The association predicts that Asian markets, relatively insulated from FED activity, will continue their solid cement demand growth. It expects that cement markets will remain attractive, with high single-digit or double-digit growth in the following regions: India, Vietnam, Indonesia, the Philippines, and Bangladesh.
The WCA also expects a significant downturn in the Turkish cement market. Set to negatively impact cement demand, it is thought that the construction industry boom of the last decade will see a drastic correction in 2019. In addition, it is thought that recent currency devaluation and high private-debt ratios will substantially reduce investments, with the association expecting Turkish cement demand to shrink by 10%.
It is expected that in the emerging markets Saudi Arabia, Libya, and Malaysia cement demand will contract. In Latin America, after their worst recession since 2014 and a series of debilitating political crises, it is predicted that Brazil might finally see growth in 2019. While these events have caused Brazil’s cement market to shrink by more than 25% over these years, a strong rebound is predicted in 2019, with growth increasing by 5%.
Overall, the association’s forecasts indicate that the world cement market in 2019 will see subdued demand, with the outlook relatively weaker than 2017 and 2018. Alongside existing global issues, a longstanding overcapacity problem in the industry, and higher CO2 emission prices in the Eurozone, the association has stated that the year ahead will be a challenging one for many cement producers.
Read the article online at: https://www.worldcement.com/special-reports/05122018/wca-predicts-cement-growth-will-slow-in-2019/