Brazil's cement market expansion decelerates in July

Brazil's cement market expansion decelerates in July
11 August 2021

Cement sales in Brazil remained almost level in July 2021 at 5.9Mt, representing a 0.1 per cent YoY increase from 5.897Mt in July 2020, according to SNIC, the industry’s professional body.

All regional markets, except for the South, showed small to moderate contractions. In the South sales were up 9.9 per cent to 1.019Mt, but at the other end of the spectrum sales in the Northeast, the country’s second-largest market, were down four per cent to 1.158Mt. The key Southeast market contracted by 1.3 per cent to 2.739Mt while in the North and Central-West regions, sales reached 267,000t (-0.7 per cent) and 717,000t (-0.3 per cent), respectively.

Exports in July 2021 increased by 31.3 per cent to 42,000t when compared with July 2020 when 32,000t were shipped to overseas destinations.

January-July 2021
In the first seven months of 2021, cement sales in Brazil improved 13.1 per cent YoY to 37.265Mt from 32.954Mt in the 7M20 while exports were up 103.4 per cent YoY to 238,000t from 117,000t.

The imminent improvement in market expectations regarding economic growth, together with the acceleration of vaccination and the reduction of the negative effects of the pandemic, significantly contributed to the result and reinforces the projections of cement consumption around six per cent for 2021, according to SNIC.

Outlook and challenges ahead
While there are good prospects for cement sales due to the positive performance of the country’s construction sector, administrative and tax structural reforms, as well as the recovery of employment and wages add uncertainty. In addition, there is the issue of cost inflation. The price of petcoke increased by 125 per cent in 2020 and in the year to date has already undergone an adjustment of an extra 60 per cent. The water crisis is also affecting electricity prices, which are now reaching the regulated ceiling. Furthermore, the price of packaging has increased by 30 per cent YoY in 2021.

Discussions about carbon pricing are also advancing, representing challenges for Brazilian cement exports to Europe and Brazil has been discussing the impacts and opportunities by carbon pricing instruments. At the end of last year, the Ministry of Economy completed the PMR (Partnership for Market Readiness) study in partnership with the World Bank, which assesses the convenience and opportunity of carbon pricing in the country. In its second phase (PMI – Partnership for Market Implementation), the study intends to discuss the bases for implementing a pricing system.

Published under Cement News