Cement producers in Russia, are slashing their expansion plans as demand from property developers shrinks due to the credit crisis, Kommersant reported on Wednesday.
Only 15 per cent of the projects now in the planning phase will be carried out, the business daily reported, citing the head of the Russian cement makers’ union, Vyacheslav Boltenko.
Lafarge, the other European major working in Russia, is moving ahead with development plans despite the downward trend in demand, the Kommersant report said.
Lafarge has plans to build several new cement factories in Russia at a cost of around EUR1bn.
European majors rushed to set up production in Russia as prices more than doubled in the 18 months to June of this year, reaching $215/t to become the highest in the world after a decade of steady growth.
But the lifting of cement import tariffs in January led Turkish and Chinese producers to flood the market, pushing prices sharply downward and undermining the profit assumptions for the future.
The global financial crisis is now cutting off funding for major construction projects, leading to a sudden drop in demand for cement and further downward pressure on the price.
Between June and November of this year, cement prices are set to fall by a third.