The international cement market is again looking to growing markets in Asia to offset weak performances in Europe and elsewhere this year. While some recovery is possible in North America from the third quarter onwards, the rate of recovery may well be less marked than hoped for earlier.
In South America, Brazil - by far the largest economy - is performing well and should continue to grow at a reasonable level and with it cement consumption. The Middle East, where Iran and Saudi Arabia are the largest consumers, is set to continue to grow steadily. Egypt is the star performer of North African markets, with demand rising by over 25% to 58Mt in 2009. Growth in 2010 will be more modest.
In Europe, Italy has regained its position as the biggest cement market from Spain, but cement demand will again be lower this year, though falling less poignantly than in 2009. Italian cement consumption is set to emerge at less than 35Mt, compared with a peak of 46.9Mt in 2006. German cement sales are forecast to be static this year, but to increase modestly thereafter to approach 29Mt by 2012. In Spain, the cement market is estimated to have contracted by around 32% to some 29Mt last year, compared with a 2007 peak of 56Mt - a further reduction in volumes to about 26Mt on the cards for 2010. Russian cement demand could stage a partial recovery this year and reach up to 47Mt, compared with an estimated 43.8Mt last year, though nowhere near the 61Mt consumed 2008. Poland looks like being the only European Union cement market of any size to be in a position to show a meaningful increase in cement consumption this year, with demand set to grow by 4% this year after the 3% decline in 2009. India enjoyed growth of 8% in 2008-09 and is expected to remain strong, in the region of 10% over 2009-10. However, adverse impact on demand from the withdrawal of the stimulus package cannot be ruled out in the short term. Rapid addition of capacity, which reached 240Mt in 2009 and is expected to rise to 270Mt by 2011 fiscal, will result in weaker prices over the period, though some regions are better placed than others.
The Chinese market grew by an estimated 16% in 2009 with consumption reaching 1,557Mt. A 10% growth is expected in 2010 driven by infrastructure, supported by the US$800m stimulus package, and continued recovery of the housing market. Elimination of overcapacity and energy-intensive or polluting plants will remain a theme again in 2010. 247Mt of new capacity is forecast to come online in 2010 (273Mt in 2009E) and up to 70Mta of vertical kiln capacity is set to be phased out.