As we all know, revenue was down for most producers year-on-year in 2020 due to the effects of the coronavirus pandemic upon construction activity and demand for building materials. There were large regional differences between how countries implemented different lockdowns, how markets responded and how they bounced back afterwards. Generally, the financial effects of this were felt in the first half of 2020 with recovery in the second.
We got some data from global cement as below:
The Indian producers tell a different story but one no less notable. Despite a near complete shutdown of production for around a month from late March 2020, the regional market largely recovered. As UltraTech Cement told it in January 2021, “Recovery from the Covid-19 led disruption of the economy has been rapid. This has been fuelled by quicker demand stabilisation, supply side restoration and greater cost efficiencies.” It added that rural residential housing had driven growth and that government-infrastructure projects had helped too. It expects pent-up urban demand to improve with the gradual return of the migrant workforce.
Unfortunately, Semen Indonesia, the leading Indonesian producer, suffered as the country’s production overcapacity was further hit by scaling back of government-based infrastructure projects as it tackled the health situation instead. Its solution has been to focus on export markets instead with new countries including Myanmar, Brunei Darussalam and Taiwan added in 2020 joining existing ones such as China, Australia and Bangladesh. The company’s total sales volumes may have fallen by 8% year-on-year to 40Mt in 2020 but sales outside of Indonesia, including exports, grew by 23% to 6.3Mt.
On a final note it’s sobering to see that the third largest seller of cement in this line-up was UltraTech Cement, a mainly regional producer. Regional in this sense though refers to India, the world’s second largest cement market. By installed production capacity it’s the fifth largest company in the world after CNBM, Anhui Conch, LafargeHolcim and HeidelbergCement. This move towards regionalisation among the large cement producers can also be seen in the large western-based multinationals as they are heading towards fewer but more selective locations. More on the world’s largest producer, China, when the producers start to releases their financial results towards the end of March 2021.
Whatever 2021 brings, let’s hope it’s better than 2020.
Post time: May-26-2021