Solid cement sales in South Africa

The Cement and Concrete Institute of South Africa reports that cement sales last year increased 10 per cent over 2004.

A record 12.9Mt of cement were sold in SA and its customs union partner countries — Botswana, Lesotho, Namibia and Swaziland in 2005 compared with 11.7Mt in the previous year. SA accounts for more than 90 per cent of cement sales in the Southern African
Customs Union.

Cement sales in SA were buoyed by the expanding building market, where strong demand for residential, retail and office buildings continued on the back of lower interest rates.

Cement sales grew a record 15.5 per cent in 2004 as the benefits of the previous year’s big interest rate cuts started taking effect. As expected, the growth rate slowed down last year but still came in at thetop end of industry projections. The most conservative forecasts were at about six per cent and the most optimistic was 10 per cent.

Cement sales have been growing ahead of expectations for the past three years or so, prompting cement makers to boost plans to expand production facilities. Three of SA’s four large cement makers have announced major expansion programmes with a combined cost of about R3bn. They are PPC, Lafarge and Natal Portland Cement. Holcim has also implemented several smaller-scale projects to increase
production.

The expansion plans represent a vote of confidence for sustained economic growth in the next few years. The bulk of the new capacity is expected to come on line in 2008.

Cement and Concrete Industry figures for 2005, released yesterday, show a further drop in exports, however. At 237,530t, exports were about 13 per cent down on the previous year. This follows a 40 per cent drop in 2004 compared with 2003, which the industry
ascribed to the strengthening of the rand.

Cement makers expect the overall market to grow again this year, albeit at a slower rate. PPC has already forecast a growth in cement sales.