Read Part 1 here.
US recovery to accelerate
Cement consumption in the US has decisively turned a corner. In 2013 a mixture of bad weather, government shutdowns and a spike in long-term interest rates pegged back growth rates. In 2014 cement consumption is foreseen to grow by 6 – 8%, driven by further growth in housing and a more robust commercial sector. The US recovery has important implications for the global cement industry. In the short-term it will improve the profitability of the big multinationals, while in the medium-term the market can look forward to significant growth in US cement imports.
Sluggish prospects for Latin America
Latin America struggled in 2013. The impact of weak GDP growth, high inflation and the decline in global commodity prices all contributed to lacklustre cement demand. In 2014, IA Cement is still pessimistic and expects demand to increase by less than 3%. New capacity in Mexico and Brazil may also affect pricing. In Mexico a recovery is predicted, driven by higher government spending after a shocking year in 2013. In Brazil, 2% growth in demand is likely, due to delays in implementing the stimulus programme and the completion of the 2014 FIFA World Cup in June. Colombia is likely to improve in 2014 with greater housing demand and some pre-election spending. Smaller markets such as Ecuador, Panama and Peru will, in all probability, experience the strongest growth.
Solid growth in the Middle East
Most nations in the Middle East are well placed in 2014. Oil prices are likely to remain elevated, with overall cement demand increasing by 4 – 5% across the region. Strong infrastructure demand will continue to push growth in Saudi Arabia, Oman and Iraq (in the range of 7 – 9%). The transformative growth in Qatar, to accommodate the 2022 FIFA World Cup projects, is still pending. Unrest continues to affect demand in a number of countries, including Syria and Yemen. Conversely, the UAE has been a beneficiary of the Arab Spring, with capital flowing into the country due to its safe-haven status. This has led to a recovery in real estate and more housing and tourism related projects are expected in 2014. Dubai has just been awarded the Expo 2020, which will lead to significant spending on infrastructure and new hotels. IA Cement also expects the market in Iran to improve after a slight drop in 2013 due to sanctions.
Read Part 3 here.
Written by Imran Akram, IA Cement Ltd. This is an abridged version of the full article, which appeared in the January 2014 issue of World Cement. Subscribers can view the full article by logging in.
Read the article online at: https://www.worldcement.com/the-americas/10012014/cement_in_2014_bubble_trouble_part_2_547/