Based on 2020, observe the rise and fall of the global cement industry

In 2020, the novel coronavirus epidemic had a huge impact on the world. Since the beginning of the year, the global death toll from the COVID-19 epidemic has exceeded one million, and the economies of many countries have been severely damaged, with GDP showing negative growth. In the October World Economic Outlook, the International Monetary Fund predicted that the global economic growth rate in 2020 would be -4. Due to the epidemic, the growth of construction, infrastructure, real estate and other industries generally slowed down, resulting in shrinking demand for cement and high uncertainty in the market. As far as the current situation is concerned, although some countries have a low degree of control over the epidemic and the demand for cement has not contracted significantly, it is still a long way to go for the global demand for cement to generally recover to the pre-epidemic level in terms of the current global economic slowdown.

Table 1: GDP Growth

of World Economies in 2019-2021E

Figure 1: Ranking of cement production by region in the world in 2018 (unit: 10,000 tons)

large multinational companies basically covers the key cement production or consumption areas in the world, and the consistent decline in the company's sales undoubtedly reflects the overall decline in global cement demand. In sharp contrast to the huge decline in sales of Lafarge Holcim, the sales of Waterland Pavilion are basically flat, which shows obvious regional and national differences. The different measures taken by different countries in the face of the COVID-19 epidemic have undoubtedly had different impacts on their infrastructure, real estate, construction and other aspects, resulting in strong or sluggish cement production and demand in different regions, forming a sharp contrast in sales at the company level.

Figure 2: Changes in comprehensive sales volume of cement clinker of multinational companies in 2019-2020H1 (unit: 10,000 tons)

Data source: CEMBUREAU, USGS, Vietnam Cement Association, Semi-annual report

of the company III. Large cement production countries: The situation changes differently

1. The International Monetary Fund predicted in its Century Economic Outlook in October that China would be the only economy to achieve positive economic growth in 2020. According to the data of the National Bureau of Statistics, China's GDP in the first three quarters has changed from negative to positive, and the cumulative investment in fixed assets has changed from negative to positive from 0.1 to September, and the cumulative investment in real estate development has increased by 5.6% from 0.1 to September, and the cumulative investment in infrastructure (including electricity) has increased by 2. The subsequent expansion of monetary and fiscal policies has led to a downward policy interest rate, which is good for all kinds of investment and makes the economy recover rapidly. Among them, real estate and infrastructure are the main pillars of economic prosperity, and their rapid recovery in the second and third quarters has provided strong support for the growth of cement production and demand. From January to September, China's cumulative cement output reached 1.676 billion tons. Year-on-year decrease 1.

Figures 3 and 4: Cumulative value and cumulative year-on-year value

of investment in real estate development and infrastructure investment (including electricity) Data source: cement big data (in https://data.ccement.1-9 month, China only exported 78,000 tons of clinker. From January to September, the total export volume of cement in China was about 2.2248 million tons, down 44 from the same period last year. Correspondingly, due to the high demand for cement in the Chinese market, the total import of clinker in China from January to September was 22.1045 million tons, up 53 from the same period last year. The import volume of cement was about 2.2696 million tons, up 58 from the same period last year. China's cement clinker import demand drives the growth of cement clinker exports from neighboring countries, providing sales channels for other countries with insufficient domestic demand.

Figures 5 and 6: Cumulative Imports and Exports

of Clinker Data Source: General Administration of Customs, Cement Big Data (https://data.ccement.com/)

Price.

2. According to the past data, the European cement production index shows a clear seasonal trend, and the COVID-19 epidemic has broken this norm. From March to April, the European cement market showed a downward trend in the traditional peak season, mainly due to the sluggish demand for cement caused by the shutdown of production under the epidemic blockade. After May, the epidemic blockade gradually weakened, the demand for cement backlog rebounded, and the cement production index jumped to its peak in the past five years in July. In August, the cement market entered a low point with seasonality, but it still performed better than in previous years. From the change of cement production, we can see that although the sudden outbreak of COVID-19 broke the normal situation of the industry and caused a deep drop in cement production and demand in a short period of time, the subsequent rebound was strong, and the cement industry did not undergo structural changes.

Figure 7: Changes

in M8 cement production index from 2015 to 2020Data source: Eurostat, cement big data (https://data.ccement. With the second round of the epidemic approaching, the end of the epidemic is increasingly distant. In the October World Economic Outlook, the IMF predicted that the euro zone economy would decline by 8.3% in 2020, with Germany, Italy and France declining by 6.0%, 10.6% and 9% respectively. While the economic environment was sluggish, the construction industry declined sharply in March and April, then rebounded in May and stabilized in June. The trend was generally consistent with the change in cement production. Judging from the strength of the rebound, the construction output index of 19 European countries in August was basically the same as that of the previous year, and the performance of the construction industry in Britain, Spain, Belgium and other countries was still relatively sluggish. However, without considering the second round of epidemic blockade, the economic resilience of Western European countries led by Germany, Italy and France made the market more confident about the economic recovery in 2021.

On the other hand, in the 12 years after the financial crisis, 45 cement plants were closed in Western Europe, and the regional cement industry weakened from cyclical to structural. Although the COVID-19 epidemic has had a severe impact on the European economy, the time limit is short and the follow-up efforts are relatively weak. The rebound in the output value of the European construction industry makes the market more inclined to believe that the COVID-19 epidemic is only a temporary impact on the economy rather than starting point of the economic downturn. As an industry closely related to the construction industry, the recovery of cement production and demand is expected to come before next year as the economy is expected to recover in 2021.

Figure 8, 9: 2015-2020M8 European construction industry growth rate and construction output

data source: Eurostat, Cement big data (https://data.ccement.Buzzi) Unicem's sales revenue in Europe in the first half of the year rose only in Germany, while the rest fell from the previous year. Heidelberg's cement sales in Europe in the first half of the year fell 9. LafargeHolcim's sales revenue in Europe fell 9.4% year-on-year, and its profit before interest and tax fell 26. CRH's sales revenue in Europe fell 12%. The strong rebound in July will be included in the performance of enterprises in the second half of the year. Without considering the twists and turns of the European cement industry caused by the second round of epidemic, the performance of major European cement enterprises is expected to rebound slightly in the second half of the year.

3.20 years, the 越南年水泥产量由1329.8 of ten thousand tons (2000) increased rapidly to 9691.By 2020, the total annual production capacity of cement in Vietnam 1. Due to the convenient trade conditions of Vietnam's ports and favorable policies for export, the domestic demand for cement is limited, and about 30 to 40% of Vietnam's cement clinker is exported to other countries.

Due to the epidemic, the construction industry in Vietnam has slowed down, and the weak demand has led to a 12% decline in cement consumption in Vietnam compared with the same period last year. In contrast, Vietnam Cement is still very active in exports. According to the data of the General Administration of Customs of Vietnam, the export volume of cement clinker in Vietnam from January to August exceeded 23.9 million tons, with a year-on-year increase of 15.7%; the 出口额超8.82 was US $billion, with a year-on-year increase of 1.

In the winter of international trade, Vietnam's cement clinker still maintained a double-digit year-on-year growth rate, which was closely related to the high demand support of neighboring countries. From January to August, China was still Vietnam's largest cement consumer market, with exports of nearly 12.6 million tons, an increase of 48.7 percent year-on-year, accounting for 52% of the total.

In addition, according to the data of Vietnam Cement Association (VNCA), two new cement plants will be officially put into operation in 2020, increasing the total capacity by about 7.1 million tons per year. By the end of 2020, Vietnam's total production capacity is expected to reach 115 million tons per year, making it a real major producer and exporter of cement clinker.

Figures 10 and 11: Cement production in Vietnam from 2001 to 2019 and cement export

from 2013 to 2020M8 Source: USGS. Cement big data (https://data.ccement.com/)

4. According to the U.S. Department of Commerce data, 2020Q1 U.S. GDP fell by about 3.4%, a decline of about $186.3 billion; In Q2 of 2020, the GDP of the United States dropped by 33.3 percent, or about 2. In contrast, the unemployment rate rose rapidly. In April, the unemployment rate of the United States reached the peak since 1948, and the total number of unemployed people reached 23.4 million. In May and June, although the unemployment rate dropped continuously, the overall level was still above 10%.

Unlike the weakening of the overall economic situation, the cement industry in the United States has not been significantly affected in terms of production and consumption. According to the data of USGS, the total shipment volume of Portland cement in the United States was 4790.5 million tons, with a 同比增长3.0 of%; the total shipment volume of masonry cement was 1.167 million tons, with a year-on-year decrease of 2.3%; the total output of clinker was 36.738 million tons, a year-on-year increase of 2. The comprehensive import volume of cement and clinker was 7.824 million tons with a year-on-year increase of 0.6%; The import volume is 6. Missouri, California, Texas, Florida and Michigan are still the main producers of cement. Texas, California, Florida, Ohio and Georgia are the main consumers of cement.

From the perspective of supply, the total output of clinker in 2020H1 was 36.738 million tons, representing a year-on-year increase. 2. From the perspective of monthly output, the output of clinker from January to April increased compared with the same period last year, while the output from May to June decreased compared with the same period last year. However, from the monthly output of clinker in the first half of the year, except for the obvious seasonality, the output of clinker did not show a significant decline due to the impact of the epidemic. From the perspective of cement supply side, only one cement plant was shut down in April due to epidemic restrictions, and the economic downturn obviously did not have a wide negative impact on cement production enterprises.

Figure 14: 2017-2020H1 clinker production

in the same month Source: USGS, cement big data (https://data.ccement.com/)

From the perspective of import and export, The comprehensive import volume of cement and clinker was 7 million 824 thousand tons, an increase of 0.6% over the same period; Canada, Turkey and Greece are still the three main import countries of cement and clinker in the United States, accounting for 68.4% of the total and 63% of the total. Compared with the same period in 2019, due to the impact of the epidemic on import and export policies, the import volume of cement clinker from China, Spain and Sweden has decreased significantly. Imports from Mexico, South Korea and Taiwan increased by 54.4%, 29.4% and 66, respectively.

Figure 15: Main import sources

of cement and clinker in 2018-2020H1 Data source: USGS. Cement big data (https://data.ccement.) Cement companies operating in the United States have shown remarkable economic benefits in the first half of the year. Cemex and CRH cement sales in the United States increased by 18% and 4% respectively; LafargeHolcim's EBIT in North America increased year-on-year 19. Although many data show that the cement industry in the United States has not been significantly affected by the epidemic, we still need to pay attention to the fact that there is still no clear conclusion about when the epidemic will end, and it is still doubtful whether the cement industry can maintain the stability of production and demand in a short time in the long run.

5. During the 8 years from 2011 to 2019, Indonesia's annual cement production capacity increased from 54 million tons to 113 million tons, with a compound annual growth rate of about 9. According to the data in recent years, the capacity utilization rate of Indonesia's cement industry is mostly between 65% and 68%. As domestic demand is in a downturn, cement plants have to increase the export of cement.

Figures 16 and 17: Sales volume of cement and total export

volume of cement in Indonesia Source: Indonesian Cement Association, Cement Big Data (https://data.ccement.2020: GDP of Indonesia decreased by 2.4% in the first quarter of the year, and then decreased by 4.19% in the second quarter; Investment in fixed assets fell by 7.89% and 9. The construction completion index fell sharply in the first quarter of 2020, with a quarter-on-quarter decline of 20.

According to the Indonesian Cement Association (ASI), from January to July 2020, China produced 36.92 million tons of cement, down 6.3% from the same period last year. In August, the sales volume of cement in Indonesia decreased year-on-year. From January to August, the domestic demand of cement was only 38.47 million tons, and the utilization rate of production capacity was only 54%. Due to the delay of real estate and domestic infrastructure development projects, the decline of bulk cement has been even greater since the second half of the year. Regionally, cement consumption in almost all regions of the country has declined, especially in Sumatra and Java, which account for 70% of Indonesia's demand. The deterioration

of macro-economy, the reduction of investment in fixed assets, and the control of shutdown under the epidemic situation together make the domestic demand of cement in Indonesia lack of momentum. In the case of overcapacity, Indonesian cement enterprises have increased their export efforts to ease the pressure of competition in the industry. From January to July 2020, Indonesia exported 4.4 million tons of cement, an increase of more than 20% over the same period last year. In 2020, when the global economic environment is turbulent, there may be opportunities for Indonesia to improve its export pattern, thereby alleviating its long-standing overcapacity pressure.

6. From the perspective of large cement production enterprises, there are 24 aquatic enterprises in Brazil. The three companies with the highest cement production capacity are Votorantim, InterCement and LafargeHolcim, all of which are multinational companies. Among them, the largest cement producer in Brazil has a cement production capacity of 34.9 million tons per year, accounting for about 49% of Brazil's national production capacity.

In the 1950s and 1960s, Brazil's economy grew rapidly with the huge investment of the government, and the growth of demand led to the rapid development of the cement industry during this period. Then, from the 1990s to the beginning of the 21st century, Brazil's cement production rose again and continued to grow, reaching a peak of 71 million tons in 2014. Since then, Brazil's cement production has gradually declined. In 2019, due to investment in infrastructure projects, especially in sanitation projects, the demand for cement in Brazil has increased, resulting in a slight rebound in cement production, and the cement industry is expected to revive. The emergence of the

COVID-19 epidemic did not delay the process of infrastructure and real estate construction in Brazil. After May, the monthly cement production increased month by month. As of September 2020, the cumulative cement production in Brazil increased by 9.4% compared with the same period last year. Production in September was 21% higher than a year earlier. This impressive growth was partly due to the real estate boom in Brazil, while Brazil's National Cement Industry Association explained that the epidemic forced people to stay at home, and people chose to rebuild and repair their houses at home, which contributed to the growth of cement production. News that the government is expected to launch new housing projects "Casa Verde Amarela" "will have a further boost to the cement industry.

Figures 18 and 19: 2014-2019 and January-September 2020 Brazilian cement production

Data source: USGS, cement big data (https://data.ccement. and changing market environment is an opportunity for development. For example, the rapid growth of cement exports in Vietnam and other countries has opened up the trade pattern by taking advantage of special opportunities. The situation of the global cement industry may change after 2020, and emerging economies may gradually grow and become the main participants in the global cement trade market in parallel with the old cement countries.