The private sector and housing sector will drive Peru’s cement market in the long-term, according to a report from local bank Banco Wiese Sudameris (BWS).
BWS said government infrastructure spending in 2004 did not show a significant increase due to the need to reduce the fiscal deficit, and that this trend will continue this year, which means the private sector will continue to be construction’s driving force.
The construction sector grew 4.7 per cent in 2004 and will edge up to 5.1 per cent this year due to a reactivation of internal demand and the advancement of infrastructure concession projects, the report added.
As a consequence, cement sales (local and foreign) grew 7.8 per cent last year.
In 2004, Cementos Lima held the top sales volume position with 2.15Mt, followed by Cemento Andino (903,484t), Cementos Pacasmayo (728,643t), Cemento Yura (498,649t), Cemento Sur (136,594t) and Cemento Selva (103,851t).
Regarding sector risks, the bank highlights political instability and uncertainty vis-vis regulatory changes that could affect private investment.
In conclusion, BWS adds the sector’s potential profitability remains high due to favourable competitive conditions, and that the sector maintains an adequate control of its production costs and the supply of raw materials and supplies.
Further, although there are no significant perceived threats of new competitors, the industry does face competition from low-cost, "informal" products that are not apt for construction.