In 2007, at the FIFA Executive Committee meeting held at the FIFA headquarters in Zurich, FIFA President Sepp Blatter officially announced that Brazil had won the right to host the 2014 World Cup. However, due to the lack of standard stadiums to host the World Cup, Brazil needs to build and renovate 12 stadiums to host the World Cup. This means that the demand for infrastructure construction in Brazil has increased, which has also led to the development of the cement industry. It is reported that the peak of the World Cup's pull on cement appeared in the previous year and last year.
In addition to the World Cup, Brazil will host the Olympic Games in Rio in 2016. In just a few years, it is rare for the World Cup and the Olympic Games to be held in the same country. The two major sports events will certainly bring new opportunities to Brazil's cement industry. Industry insiders expect that Brazil's cement industry will maintain steady growth in the next few years.
Brazilian cement industry overview:
Brazil's cement industry dates back to the end of the 19th century, when the country's first cement factory was established; industrial-scale production began in 1926 with the commissioning of the Companhia Brasileira de Cimento Portland Cement Factory; in 1933, exports exceeded imports for the first time; In 1962, the per capita consumption of cement in Brazil increased from 12.9 kg in 1935 to 67.7 kg after the strong growth of large-scale industrialization and infrastructure construction. In 1999, the consumption of cement in Brazil reached a milestone of 40 million tons, but since then, Brazil has been in economic difficulties until 2004; After 2004, the cement industry in Brazil has been growing year-on-year due to the development of the housing industry and the growth of other construction projects encouraged by the policy.
The Sindicato Nacional Da Ind Indústria Do Cimento (SNIC), or the Brazilian National Cement Industry Association, was established in 1953 to protect the interests of the Brazilian cement industry and to represent it in cooperation with the Brazilian government. According to SNIC, in 2012, Brazil's cement consumption reached 69.3 million tons, up 7.3% from 64.1 million tons in the same period of 2011; per capita cement consumption increased from 333 kg in 2011 to 353 kg year-on-year; cement exports fell to 260,000 tons; cement imports fell to 977,000 tons. Brazil has higher cement consumption, following China, India and the United States. In 2011, cement consumption in China, India and the United States was 2.05 billion tons, 236.9 million tons and 72.2 million tons, respectively. In 2013, Brazil's cement production increased from 68.8 million tons in 2012 to 70 million tons, while annual clinker production capacity increased from 57 million tons in 2012 to 60 million tons.
In addition, in 1936, the Association of Portland Cement (ACPB) in Brazil was founded to "promote the study of cement and its applications.". Unlike SNIC, ACPB focuses on technological innovation and collaboration with education and research institutes. In 2014, ACPB developed the course "Architecture and Construction: Materials, Products and Applications, Introduction to Building Systems" in collaboration with the Faculty of Architecture at the University of Mackenzie, located in the State of São Paulo, Brazil, and published an architectural guide on the construction of public building projects.
In addition to ordinary Portland cement (OPC), the white cement industry in Brazil is well developed. In 2007, the sales volume of white cement increased from 960,000 tons in 2006 to 1.15 million tons.
Table 1 : Main data for Brazil
Area 8,515,767 sq km State 26 Capital Brasilia Population 201 million Language Portuguese Number of integrated cement plants in 2014 72 Number of cement manufacturers in 2014 15 Cement production capacity in 2014 72.2 million tons/year Clinker production capacity in 2013 60 million tons/year Cement consumption in 2012 69.3 million tons Cement production in 2013 70 million tons Gross domestic product, 2013 $2,422 billion GDP per capita, 2013 $12,100 GDP growth rate, 2013 2.5% Unemployment rate in 2013 5.7% Inflation rate for 2013 6.15% Industrial growth rate in 2013 3%
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The development of the Brazilian cement industry in 2014:
In 2014, there were 72 integrated cement plants in Brazil, and the annual cement production capacity increased from 69.2 million tons in 2013 to 72.2 million tons. There were no new cement plants in Brazil in 2014, but some were expanded and others are under construction.
All 23 Brazilian States have cement production. Cement production is mainly distributed in densely populated States, such as Sao Paulo, Minas Gerais and Rio de Janeiro, with populations of 43.7 million, 20.6 million and 16.4 million, respectively. In addition, these States have the highest cement consumption in the country (see Table 2).
Table 2 : Top 8 Brazilian States with the highest cement production capacity in 2014
In 2012-2013 and January-February 2014, cement sales in Brazil increased year-on-year. According to data released by the Brazilian National Cement Industry Association (SNIC), cement produced in Brazil is mainly sold to retail enterprises (55%), while relatively little cement is sold to ready-mix concrete manufacturers (21%), other concrete manufacturers (11%) and contractors (12%).
There are mainly eight cement enterprises in Brazil, which have 64 cement plants, with a total cement production capacity of 65.05 million tons, accounting for 90.1% of the country's total production capacity and 80% of the country's cement plants.
Votorantim Cimentos is a leader in the Brazilian cement industry, with 19 cement plants (including those under construction) and an annual cement production capacity of 23.3 million tons. Votorantim Cimentos has had worldwide operations since its founding in 1933. In addition to cement, Votorantim Cimentos also produces concrete, aggregates, mortar and lime.
InterCement Brasil is owned by Brazilian construction group Camargo Corr Corrêa and is the second largest cement manufacturer in Brazil. InterCement Brasil has 13 integrated cement plants with an annual output of 14.9 million tons of cement. In 1968, InterCement Brasil built its first factory, the Apiai Cement Factory, in the state of Sao Paulo, and today it operates all over the world.
Cimento Nassau, part of the John Santos Group, has 10 integrated cement plants in Brazil, with an annual cement capacity of 6.71 million tons, making it the third largest cement manufacturer in Brazil. Cimento Nassau's factories are mainly located in the north of Brazil, so Cimento Nassau has the highest market share in the north of Brazil.
Lafarge Brazil, which belongs to the French cement giant Lafarge Group, entered the Brazilian market in 1959. Lafarge Brazil is the fourth largest cement manufacturer in Brazil, with seven cement plants, 1800 employees and an annual cement production capacity of 6.33 million tons.
Holcim Brazil, which belongs to the Holcim Group of Switzerland, has four cement plants with an annual cement production capacity of 4.5 million tons and is the fifth largest cement manufacturer in Brazil. Holcim Brasil entered the Brazilian market in 1951 and employs around 2,000 people. Holcim Brasil operates mainly in the south-eastern region of Brazil.
Cimento Tupi, with 3 cement plants and an annual cement production capacity of 3.5 million tons, is the sixth largest cement manufacturer in Brazil. Cimento Tupi was founded in 1949 as Cement Company Vale do Para Paraíba and has been growing steadily ever since. In 2013, Cimento Tupi expanded its Pedra do Sino factory in Minas Gerais. Cimento Tupi mainly produces composite Portland cement and Portland cement with higher early strength.
Brennand Cimentos is part of the Brennand Group and was built in 1917. With the completion of Joao Pessoa's plant, Brennand Cimentos will have three cement plants with an annual cement capacity of 3 million tons, making it the seventh largest cement manufacturer in Brazil. Brennand Cimentos manufactures all types of cement, aggregates and concrete products.
Mizu Cimentos Especiais has five cement plants in Brazil with an annual cement production capacity of 2.81 million tons. Mizu Cimentos Especiais is the eighth largest cement manufacturer in Brazil in terms of cement production capacity.
Table 3 : Top 8 cement producers in Brazil (in terms of cement capacity)
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The Brazilian Syndicate Case:
The development of Brazil's cement industry was also affected eight years ago when Brazil's Competition Bureau (Cade) launched an investigation into Brazil's major cement companies. In April 2014, Brazilian cement companies suspected of corporate alliances will face a fine of 1.4 billion euros and be forced to sell cement assets. Brazil's Lafarge was exempted from charges because it reached an agreement with Cade to divest its assets and fined $19 million.
Votorantim Cimentos will be fined US $662 million and sold 35% of its cement assets (equivalent to 11 million tons of annual cement production capacity), while Holcim Brasil will face a fine of US $216 million and be forced to sell 22% of its assets.
Itabira Agro-Industrial (owned by Cimentos Nassau) will face a fine of $175 million and be forced to sell 22% of its assets; Cimpor Cimentos will be fined $126 million and have to sell 25% of its assets; InterCement Brasil will be fined US $103 million and will sell 25% of its assets, while Cimento Itamb Itambé will face a fine of US $37.5 million, but because it has only one cement factory, it does not need to sell assets.
However, before deciding on the final punishment, Cade and the fined enterprise will appeal the legality of the decision. Cade believes that the consolidation of Brazilian cement companies will lead to an increase in cement prices , which will be passed on to consumers and lead to an economic loss of US $6.3 billion.
Performance of Brazilian cement companies:
Brazil's cement industry has continued to grow in recent months. According to the National Cement Industry Association (SNIC), Brazil sold 70.4 million tons of cement between January 2013 and January 2014, an increase of 2.5% year-on-year. Among them, in January 2014, Brazil's domestic cement sales increased by 6.8% year-on-year, while cement exports fell by 54.2% year-on-year; in February 2014, Brazil's cement sales increased by 0.8% year-on-year to 5.6 million tons, while cement exports fell by 71.1% year-on-year. It is reported that the decline in cement exports is mainly due to the increase in domestic cement consumption.
Nevertheless, the results of Brazil's major cement manufacturers were disappointing in 2013. Votorantim Cimentos described 2013 as a year of "instability and disappointing growth", despite the most promising performance in the domestic market. In 2013, Votorantim Cimentos reported a 4.1% increase in cement sales and a 10% increase in net income. However, in August 2013, Votorantim Cimentos cancelled its $4.8 billion IPO due to poor market conditions. Votorantim Cimentos initially postponed its IPO from June 2013 to September 2013, according to the Dow. Lorival Luz, chief executive of Votorantim Cimentos, said: "The company is still planning an IPO and we will continue to monitor developments in the capital markets to revive the offering."
In addition, in 2013, the performance of Brazil Holcim is not optimistic. In 2013, Holcim Brazil's cement sales fell 4.6% and cement prices rose 2.2% year-on-year. The decline in cement sales was mainly due to delays in infrastructure construction projects, which largely reflected cement sales in South America as a whole. In 2013, cement sales in South America were 25 million tons, up 0.1% from 24.9 million tons in the previous year.
In addition, in 2013, Lafarge Brazil's performance was also poor, and cement sales fell due to "production restrictions in the fourth quarter". However, thanks to rapid inflation and the depreciation of Brazil's real estate industry, Lafarge's cement sales in Brazil rose by 3% year-on-year.
Outlook:
In January 2014, the International Monetary Fund (IMF) predicted that Brazil's gross domestic product (GDP) growth would remain at 2.3% in 2014 and 2.8% in 2015. The economies of South America, the Caribbean and emerging markets are expected to grow more sharply overall (see table 4).
Table 4 : GDP Growth (%) Forecasts for Brazil, South America, the Caribbean and Emerging Markets
Costdriver, Brazil's raw material industry forecast and trend publisher, said in 2013 that it expected Brazil's cement industry to expand significantly in the future. By 2016, infrastructure development is expected to rise by a whopping 25% (with half of this growth coming from the housing sector), so Brazil's annual cement production capacity is expected to reach 120 million tons.
In addition, more large cement manufacturers also expect Brazil's cement industry to improve in 2014. Among them, Votorantim Cimentos predicts that Brazil's cement consumption will rise in the near future, benefiting from the growth of housing shortage and infrastructure development. In addition, Brazil Holcim also expects that in 2014, although Brazil's ready-mixed concrete sales are expected to decline, cement sales will rise.
The International Monetary Fund, industry experts and cement producers have made positive forecasts for the future development of the cement industry in Brazil, so the cement industry in Brazil may continue to grow steadily in the next few years. As host of the 2014 FIFA World Cup and the 2016 Olympic Games, Brazil will see an increase in infrastructure projects. In addition, exchange rate stability and nationwide corruption control will further attract foreign investment. However, the rise in inflation has had a negative impact on many Brazilians, especially on Brazilian businesses and low-income families.
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