World cement consumption is expected to decline to 3.9 billion tons in 2020, according to CW Research's extended 2H2020 update of the Global Cement Volume Forecast Report. Global cement consumption has seen a decline across almost all regions with the exception of China, as the economies have grappled with lockdowns seeking to halt the spread of the pandemic leading to a negative impact on economic growth and construction activities in the short term.
Given these challenging and uncertain times, to better inform clients, CW Research also provides two additional scenarios in addition to the base case. These projections for the optimistic and conservative outlooks take into account a wide gamut of variables at the national and regional levels to project the probable demand scenarios based on a V-shaped recovery or a longer U-shaped economic recovery and consequently construction sector activity.
The IMF’s October update revealed that the global economic output is projected to contract by 4.4 percent this year, compared to a growth of 2.8 percent in 2019, due to the lockdowns imposed across the globe. As a result, economic effects are being felt across the world and even in China, which is the only major economy expected to grow in 2020.
Unprecedent support from governments, Central Banks and International institutions to stimulate economies is likely to add some momentum to cement demand, but the 2020 outlook remains challenging.
“The GDP and construction sector will rebound as the economies open up and lockdowns are lifted as there is still pent up consumption demand and the contraction that occurred in the global economy was forced and not a structural one. Unsurprisingly, global demand is expected to be driven by China and Asia ex-China with a return to robust growth in India, the Philippines, Bangladesh, and Vietnam", points Carolina Pereira, CW Group's Manager, Advisory and Research.
Construction sector remains weak in major European markets
Heavily affected by the pandemic’s impact on the construction industry across all major consuming countries, Western Europe is expected to see an overall cement demand contraction of more than 5 percent year-on-year in 2020.
CW Research estimates cement consumption in the Spanish market to contract by 12 percent this year, following a growth of more than 6 percent year-on-year in 2019, as the recovery of the real estate sector has been brought to a shuddering halt by the pandemic. Italy, meanwhile, is set to witness a decline of around 10 percent in 2020 on the back of the pandemic’s effects on economic growth.
In the Middle East, cement demand is set to decline in 2020 after a recovery of more than 4 percent in the previous year. Saudi Arabia is the only major market expected to see a significant increase within the region.
While in Latin America, demand is expected to contract by 6 percent as a result of the regional economic contraction caused by the strict lockdown measures. Surprisingly, Brazil is expected to see a growth in demand of 4 percent on the back of sustained demand from reconstruction works.
Focus on infrastructure to drive growth in Chinese cement consumption
The pandemic has thrown a wrench in the projected path of cement consumption in China. Cement industries have been required to reduce or suspend their production during specific time periods, capacity additions have been strictly monitored and limited to substitution of existing capacity. This approach, however, is likely to take a backseat for the next few years, as Chinese state-planners are turning to infrastructure and real estate as the key to stimulate the economy.
CW Group’s Global Cement Volume Forecast Report (GCVFR) is a twice-yearly update on projections for cement volumes on a national, regional and global level. The forecast provides global and regional outlooks, as well as detailed perspectives on 57 of the world’s most important countries’ cement consumption, production, net trade and cement production capacity. The five-year outlook presented in this benchmark study enables industry professionals to shape their perspective on markets and business priorities.
Find out more about the report here