Guatemala's cement demand to grow by 2026F on the back of robust infrastructure investment

Guatemala's cement demand is estimated to grow by 1 million tons between 2021E and 2026F, boosted by an increase in infrastructure investment in the country, according to CW Research's 2021 update of the Guatemala Cement Market & Forecast Report.

Guatemala has a robust infrastructure pipeline with total investments valued at almost USD 2 billion over the next five years including the modernization of La Aurora International Airport, the road interconnection and urban passenger transport for the north-south axis of Guatemala City and the Tecún Umán II intermodal port.

The country's cement demand is already expected to witness an increase in 2021, boosted by an increase in government spending as it battles to overcome the damage wrought on the economy by the pandemic. According to the Bank of Guatemala, the country's construction sector is expected to boost the economy by growing at a higher-than-expected rate of growth of 7 percent in 2021.

The country's cement demand is expected to witness an increase of almost 8 percent in 2021, boosted by higher government spending. By 2026F, the Guatemalan cement market is expected to see an increase at a CAGR of 5 percent on the back of strong infrastructure investments.

The Guatemalan cement industry currently oversupplied, with an estimated production capacity of 6 million tons. This figure, however, is expected to remain stable in the next five years, growing at a CAGR of almost 1 percent, as Ultracem enters the market with one grinding plant.

Despite the current oversupply, the average national cement companiesÔÇÖ utilization rate hovers around 60 percent and is expected to gradually increase by 2026F supported by sustained demand growth.

ÔÇ£Although the market currently is oversupplied in terms of production capacity, the main challenge facing domestic producers are the rising levels of imports from China, Vietnam and Turkey at far more attractive rates. This is expected to be a growing challenge further complicated by the imposition of a cement tax, even as the government invests in infrastructure projects in the country", observes Prashant Singh, Associate Director at CW Group.

Growing imports to put pressure on cement prices

Guatemala's average cement retail price in 2020 was estimated to have declined by 1 percent year-on-year. With demand expected to improve as the economy bounces back after a tough 2020, rising retail prices are expected to come under pressure from lower priced imports.

In 2020, ex-works prices declined by about 3 percent decline when compared to the 2019 but, for 2021E, they are expected to increase by almost 4 percent in the country as companies slightly adjust the production costs to account for the imposition of the cement distribution tax of USD 0.2 per 42.5 kg bag or equivalent in bulk sales. Retail prices, which for the past few years have been relatively stable, are expected to increase in 2021E on the back of strong demand.

The Guatemala Cement Market & Forecast Report provides qualitative and in-depth market assessment and forecast of the country's cement industry, including cement volume trends in detail, trade flows, cement demand and production (historical and a five-year outlook), per capita consumption, and the competitive landscape. The report also comprises key players profiles, cement production facility details, including past and announced brownfield production increases and greenfield projects. Find out more about the report here.