Updates this week from the Latin American cement sectors of Colombia, Bolivia and Peru show buoyant market conditions prevail and some local producers are expanding capacities to capture a greater share of market growth.
Earlier this week, Cementos Argos reported that it has seen a continued upward trend in its domestic market of Colombia where current economic growth forecasts, the recovery of the sovereign-grade investment and government infrastructure projects point to a positive outlook for the local construction sector. "In Colombia, we continue to see a market with high volumes, especially in the ready-mix concrete business which is recording historic highs for the division, sustained on robust macroeconomic fundamentals. Medium- and long-term infrastructure projects, both public and private, seem reassuring," the company said in a statement.
For the first eight months to August national statistics office Dane shows that sales have increased 6.1 per cent to 7Mt. Argos noted that cement sales recorded in the recent weeks, as well as unprecedented concrete volumes underline the market dynamism. Indeed, the local construction sector is forecast to grow by 3-6 per cent annually over the next decade. Investments planned for the nine-year period 2012-21 add up to US$55.2bn (19 per cent of GDP), and represent the country's highest-ever infrastructure allocation. The National Development Plan (2011-14) will also see the development of 1m homes and public works and maintenance and recovery programme.
To meet future increases in demand, last month Argos announced that it will spend US$93m on expanding capacity in the country's central zone. The main focus of Argos' investment will be the expansion of its Rioclara plant by 900,000tpa of cement which involves extending clinker capacity and installing a new vertical mill. The investment will take Argos' domestic installed capacity from 10Mta to 10.9Mta and is scheduled to start operations in 1Q14.
Meanwhile, Bolivian cement sales continued their climb with deliveries to September increasing 8.52 per cent to more than 2Mt, data from the Bolivian Institute of Cement and Concrete (IBCH) also showed this week. Domestic cement plants registered an increase of 5.47 per cent. Moreover, imports have become a more prominent feature in the local market, rising 4.72 per cent in the first nine months of the year against the same period of 2011.
Geographically-speaking, Santa Cruz continues to be the largest consumer, with 617,815t up to September, La Paz purchased 493,392t, Cochabamba 374,023t and Chuquisaca, 132,259t. La Paz noted the biggest rise in demand with 8.13 per cent, followed by Chuquisaca at 8.13 per cent and Santa Cruz at 7.37 per cent.
Previously, Bolivian Chamber of Construction (Caboco)'s Christian Edward had said one of the main factors of sustained growth in demand was a very marked housing shortage which has generated a large market for construction development. Looking ahead, according to IBCH projections, cement sales are expected to note almost a 14 per cent YoY increase by year-end to 3.06Mt. With cement production levels at 3.03Mt, the IBCH has said that there are least two new cement facilities announced in Santa Cruz which are expected to become operational by 2014.
In Peru, the building sector is being seen as the motor of the local economy as the construction of shopping malls, homes and copper mines and the government's infrastructure-heavy stimulus package is fuelling growth in South America's fastest-expanding economy. This is being reflected in cement consumption where for the nine months to September 2012, domestic dispatches rose 16.62 per cent YoY to 6.96Mt compared to 5.97Mt in the same period of this year. For the third quarter local shipments stood at 2.6Mt.
Underlining these advances, on Tuesday Peru's largest cement producer Union Andina de Cementos (Unacem) announced a net profit to PEN70.3m (US$27m) compared with PEN42m in the same quarter of the previous year boosted by strong sales. The company, which is the result of a merger between Cementos Lima and Cementos Andino, said that cement production in the third quarter was 986,935t, up 13.2 per cent compared with the same quarter a year earlier.
According to domestic cement association Asocem, Unacem is installing an extra 1Mta of cement capacity at its plant in Lima while Caliza Cemento Inca is adding a further 0.2Mta of cement volumes to its Chosica works. This will take total cement capacity in the Peruvian market from 13.48Mta in 2012 to 14.68Mta next year.