Gray cement trade prices recorded a general increase in the first quarter of 2018, according to the 1Q 2018 update of CW Research’s Global Cement Trade Price Report (GCTPR).
Meanwhile, cement domestic indices displayed mixed trends across geographies.
“The capacity reduction program that China is implementing will shape the future of the cement industry in Asia. As ex-works and retail prices become more advantageous for domestic manufacturers, their focus is expected to shift away from foreign trade, ameliorating the pricing environment in Southeast Asia”, notes Filipe Gouveia, associate analyst with CW Research.
US domestic prices rise despite adverse weather conditions
Domestic prices recorded mixed trends in Asia Pacific. In China, cement ex-works prices rose to USD 51.5 per ton on a yearly basis, driven by a supply decrease of both cement and clinker. In the second quarter of 2018, domestic rates are expected to decline almost two percent on a quarterly basis, to USD 64.2 per ton. This downward pressure in pricing is likely to outweigh the benefits of both increasing sales and demand. In East Asia, the still ongoing appreciation of the local currency against the US dollar caused cement prices to increase in South Korea.
In the US, despite the intense hurricane activity and record levels of rainfalls observed in 2017, cement manufacturers benefited from the continuation of stable market conditions and good underlying demand.
Meanwhile, in the first quarter of 2018, average ex-works prices for the Mediterranean Basin region recorded a quarterly improvement of 2.4 percent.
Global trade prices to increase in 2Q 2018
In March 2018, global average gray cement trade prices increased by 1.2 percent to USD 56.9 per ton when compared to March 2017.
As observed by Tea Vukicevic, associate analyst with CW Research: “Hereafter, positive macroeconomic developments will provide a solid background for increasing trends in pricing environment across most regions. On the other side, the accumulation of inventory in the supply chain is expected to lead to a sharp decrease in prices in markets such as India, thus affecting the Asia-Pacific-Japan regional average.”
Over the first quarter of 2018, China stood as the world’s leading gray cement exporter, with shipped volumes increasing by 10 percent year on year. Since the Chinese cement market is currently undergoing a process of capacity eliminations and production decrease, export volumes are expected to decline in future months.
Most regions are likely to display price increases in the second quarter of 2018, with North America and Eastern Europe standing out as exceptions.
In Western Europe, FOB prices are projected to rise by five percent due to constantly increasing production costs. In Asia-Pacific-Japan, high price improvements are expected to start moderating in 2Q 2018 due to the intensifying competition in the region.
Turkey still leading white cement exports
Regarding white cement trade, Turkey emerged once again as the largest exporter of the premium commodity in the first quarter of 2018, accounting for 23 percent of the global white cement trade.
Similarly to the ending quarter of 2017, Asia-Pacific-Japan was the leading clinker exporting region during the first quarter of this year, having shipped a total of 5.7 million tons. Average clinker export prices are projected to experience a decrease in June 2018, driven by contractions in India and Thailand. India, however, is forecasted to export clinker at the highest regional FOB rates through June 2018.
In 1Q 2018, Japan continued to lead the slag exporting market, accounting for a 50 percent share of global shipments. On a quarterly basis, Japanese trade prices for slag improved 11.7 percent.
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