FOB prices for gray cement increased globally in the last quarter of 2017, and are projected to record a general stabilization in the first quarter of 2018, according to the 4Q 2017 update of the Global Cement Trade Price Report (GCTPR) from CW Research.
Meanwhile, cement domestic indices showed mixed movements across geographies.
As noted by Tea Vukicevic, associate analyst with CW Research: “looking onwards, healthier market dynamics in major markets across Europe are expected to contribute to an improved trade pricing environment, while in some rising input costs will be the main driver in future trade pricing. On the domestic side, future ex-works rates in China are expected to trend upwards, coupled with solid demand and lower inventories caused by imposed production limitations that will last until March 2018.”
Ex-works prices rise in the US; Southeast Asia still struggling
Average selling prices for gray cement have displayed mixed trends across Latin America. In Mexico, ex-works rates for the commodity decreased to USD 70.3 per ton, following threats from the construction industry to import cement. The Brazilian market remained pressured in 4Q 2017, dragged down by a still poorly-performing economy. In Brazil, domestic pricing deterioration is expected to keep bringing the regional average downwards.
Conversely, in Argentina, a strong public investment on infrastructure and housing drove the cement demand and prices upwards.
Over the same period, in the US, a strong construction activity across most states, particularly in Texas and California, led to a year-on-year price expansion of seven percent. In Southeast Asia, pricing pressure remains coupled with overcapacity in most markets, having led to a quarterly contraction of three percent in Indonesia. As price competition eases in the following quarter, CW Research expects domestic indices to stabilize and gradually rise.
FOB prices to remain stable
In December 2017, global average gray cement FOB prices increased by 0.5 percent to USD 56.5 per ton when compared to September 2017. Most regions will witness a cement pricing stabilization in the first quarter of 2018, albeit with a few exceptions – such as the North America, and Scandinavia and Baltics regions, whose cement trade prices are projected to decrease.
Filipe Gouveia, analyst with CW Research, observes: “the fourth quarter of 2017 recorded a decline in Portland cement traded volumes on a yearly basis, reflecting applied measures to combat smog in China. Capacity increases and self-sufficiency in importing markets in Africa and Asia, as well as cement import bans in markets such as Algeria and Congo, are affecting the global traded gray cement volumes.”
China stood as the world’s leading exporter of the commodity in 4Q 2017, even though its exported volumes decreased by six percent YoY and affected global exported volumes. The Chinese cement market is dealing with capacity eliminations and a cement production decrease, thus also pressuring export volumes downwards.
Measures to reduce pollution during the peak heating season are continuing to support a price hike in China, where CW Research expects the largest quarterly increase to amount to four percent, in 1Q 2018.
In the Med Basin region, FOB prices are expected to continue to gradually increase due to higher production costs, namely comprising higher electricity tariffs and labor costs in Spain.
Turkey still leading white cement exports
For white cement, Turkey continued being the largest exporter of the premium building material in 4Q 2017, with exports accounting for 26 percent of global white cement trade.
Asia-Pacific-Japan was the leading exporting region of clinker during the last quarter of 2017, with a total of 6.8 million exported tons. Average export prices are projected to experience a slight decrease in March 2018, driven by a contraction in India. South Korea is forecasted to export clinker at the lowest regional FOB rates through March 2018.
Slag exports continued to be led by the Japanese market, which shipped over 50 percent of the global total. In Japan, FOB prices for the commodity fell 5.3 percent on a quarterly basis.
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