Market Demand Forecast and Regional Dynamics-Global Cement Demand Stagnant
According to On Field Investment Research ®, global cement demand will level off between 2024 and 2030. Only parts of the world, such as the Middle East, India and Africa, will see growth. The cement markets with the weakest demand growth performance are expected to be Turkey, China and Europe, while the cement markets with the best global demand growth performance will be sub-Saharan Africa (expected to grow by 77% by 2030), India (expected to grow by 42%) and North America (20%).
Regional development and cement prices
1. Challenges and cost pressures
After the epidemic, the cement industry is facing a sharp rise in production costs, with double-digit growth in fuel, electricity and international freight rates. In addition, the soaring price of carbon outside the free quota has further pushed up the price of cement.
2. Price resilience and discipline
In 2023, global energy prices (especially thermal coal and petroleum coke) generally fell, and the price of carbon dioxide dropped from 80 euros/ton to about 55 euros/ton, but these changes did not have a significant impact on cement pricing in Europe.
3. Comparison
of the development of mature markets and emerging markets in 2024 In 2024, the trend of cement prices in different regions of the world is divided, and Europe and the United States are expected to maintain high prices. High prices in Europe and the United States are determined by a combination of factors, such as supply chain disruptions, increased production costs, regulatory pressures and industry discipline. On the contrary, cement prices in emerging markets are expected to weaken significantly, with more and more companies voluntarily giving up profits in order to compete for market share, and the volatility of cement prices has intensified. Development trend
of
global cement industry 1. Expansion and diversification
Due to the investment of local and foreign enterprises, the production capacity of emerging markets will increase significantly. India is expected to add 1 billion tons of cement capacity by 2030.
Chinese cement enterprises will continue to expand overseas markets and gain a dominant position in some markets.
2. Embrace sustainable development
a) In order to reduce the global carbon footprint, cement manufacturers are paying more and more attention to the importance of supplementary cementitious materials (SCMs), and are exploring how to obtain reliable sources of SCMs such as slag and fly ash. Although the use of SCMs may be limited and the cost may rise, the importance of SCMs will gradually increase globally, and cement companies will continue to increase the use of SCMs such as slag and fly ash in production.
Considering the limited supply, the price of SCMs is expected to rise significantly worldwide. Beginning in 2024, there may be a regional shortage of traditional SCMs, and new alternatives such as activated clay may be developed.
B) Production of calcined clay cement will increase as long as raw materials are available. SCMs, clinker substitutes and other emission reduction methods have not been widely adopted in 90% of the
world's emerging markets, so there is still a need to focus on existing green solutions.
3. Carbon capture technology
The development of carbon capture technology is not as expected, and there is still a long way to go to achieve large-scale application.
At present, the investment cost of deploying carbon capture devices has exceeded the construction cost of cement plants. Major European cement companies, such as Heidelberg and Holcim, have chosen to invest in large cement plants equipped with large-scale carbon capture devices, reflecting their emphasis on sustainable development and environmental protection, but the cost is very high.
(a) The development of carbon capture technology is still in its infancy and its global application is very limited.
(B) Storage of carbon dioxide is also a problem, as the cost of carbon capture is high and may be passed on to consumers, resulting in higher cement prices.
C) European independent cement companies may face major challenges, and they generally cannot afford the high cost of building carbon capture devices. So they need to choose between investing heavily in carbon capture technology to remain competitive or facing the risk of closing down because they can't meet higher and higher environmental standards.
d) The closure of cement enterprises that are unable to deploy carbon capture devices will not only affect the enterprises themselves, but also affect the cement market in Europe and the United States. With the reduction of production capacity, the overall supply of cement will also shrink, or push up the price of cement. In addition, the closure of enterprises will also lead to the reduction of jobs, thus affecting the local economy.
e) In general, the new carbon dioxide regulations may lead to the elimination of some local clinker production capacity in Europe, resulting in a sharp rise in local cement prices, unless large-scale imports of overseas cement, European cement prices may exceed 250 euros/ton.
4. World Cement Trade — — Import and Export, Opportunity or Risk?
a) Low-priced cement from Algeria, Egypt, Tunisia and Turkey will flood the European market unless effective market protection measures, such as the imposition of regulatory barriers, can be established.
B) In order to consolidate its market position in Europe and the United States, some cement enterprises have begun to acquire terminals in target countries and cooperate with customers and cement enterprises in target countries to export low-cost green cement to target markets.
C) Global FOB clinker and cement export prices will continue to decline as China moves from importer to exporter.
d) In 2024, the global cement overcapacity may reach 1 billion tons, and 1/3 of the global cement production capacity will be idle. The international flow of cement may become a solution to the global overcapacity of cement.
e) Unless trade protection barriers are established, international cement trade will reach a new high to fill the cement supply gap in Europe, the United States and sub-Saharan Africa.
5. Industry dynamics and market leadership
Large European cement multinational groups may further divest their investments in India, Africa, Turkey and China, and local enterprises in these regions may get more development opportunities.
Summary
The global cement industry is at a critical turning point. Forecasts show that demand in the Middle East, India and Africa will increase, and cement companies will have to respond flexibly to these changes in contrast to weak markets in Turkey, China and Europe. Author
: Emir Adiguzel
, Founder of the World Cement Association