Can Mexico’s fiesta continue?

Published 05 July 2021

Despite initial concerns that Mexican cement demand would see a sharp contraction in 2020 due to the COVID-19 pandemic, domestic consumption held up better than expected through the year. The early signs for 2021 are encouraging but, with a rollercoaster of expectations ahead, Credit Suisse asks how long can Mexico’s fiesta last? By Vanessa Quiroga, Credit Suisse, Mexico.

Going forward, the picture for Mexican cement demand, exports and utilisation levels is promising.

The outlook for pricing is positive although cost pressures hang over expectations for margins

Mexico is one of the most important cement markets in the Americas, with total shipments in 2019 of 39.9Mt (for reference, the US apparent demand was close to 100Mt in the same year). When the Mexican federal government published a decree in March 2020 requiring that cement production be halted due to the COVID-19 pandemic, cement and construction companies were understandably worried. Restriction of cement production would have virtually shut down all construction activity in the country, with a corresponding impact on a wide array of industries and products. Therefore, the Mexican cement industry responded swiftly, communicating effectively to the government the negative impact that such a restriction could have had, particularly bearing in mind the operating challenges associated with turning off kilns.

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