India and Pakistan lead global cement capacity through 2025

World cement capacity is projected to exceed 6 billion tons by 2025 with the largest increases projected to come from the Asia ex-China region with almost 200 million tons per annum, according to the CW Research's 2H2020 update of the Global Cement Volume Forecast Report.

While Chinese capacity is expected to continue on its overall decline trajectory this policy may be realigned temporarily to take into account the vast fiscal stimulus and the large pipeline of infrastructure projects at the national, state and provincial levels. Meanwhile, other major regional markets are expected to bounce back strongly from a forgettable 2020, with robust capacity expansions to take advantage of a sustained push on the construction sector.

In absolute terms, India is expected to add almost 109 million tons between 2020 and 2025F, followed by Pakistan and Vietnam. Of those three countries, Pakistan is expected to increase capacity at the fastest pace, at a CAGR of almost 8 percent over the forecast period.

ÔÇ£Emerging markets globally, but especially those located in Asia including India, Vietnam, Indonesia, Pakistan and the Philippines, are expected to see additional capacity additions as manufacturers aim to take advantage of the sustained focus on infrastructure by regional governments. While in the current pandemic scenario, sustained demand for cement is expected over the short to medium term to be driven by government stimulus policies, segments like rural housing in India and the relocation of the capital of Indonesia from Jakarta to the province of East Kalimantan on Borneo, are expected drivers for capacity additions in this region", states Prashant Singh, CW Group's Associate Director.

Capacity additions expected to slowdown in 2020

By the end of this year, global ex-China cement capacity additions are projected to reach almost 56 million tons. This is a decrease from the previous CW Research's 1H2020 update, when it was the Volume expected that the global ex-China would have an addition in capacity of over 86 million tons in 2020.

This scenario has been negatively revised given the current global economic outlook, as economies continue to grapple with the continuing effects of the pandemic. In some markets, cement manufacturers not only decide to postpone upgrades at existing plants but also delayed the commissioning of greenfield projects, which are likely now to come online sometime in 2021.

Vietnam and Indonesia to see robust capacity growth over the next five years

Two of the Asian markets with the largest installed cement production capacity, Vietnam and Indonesia are expected to increase it by a CAGR of 3 and 2 percent, respectively, in the 2020E-2025F period. One of the largest exporters of cement worldwide, Vietnam is predicted to add 24 million tons to its capacity in the period as it seeks to not only meet demand from major export markets of China and Bangladesh (for clinker) but also to cater to increasing domestic demand.

In Indonesia, 12 million tons are expected to be added to its capacity in the said five-year period despite a growing concern in the industry due to low utilization rates and pressure on prices.

Currently, taking into account only the markets analyzed in the report, Vietnam holds 13 percent of the Asia ex-China regional capacity, while Indonesia accounts for 9 percent.

Africa to increase production capacity by more than 50 million tons

In Africa, a notable capacity expansion is expected to take place from 2020 to 2025F, with an addition of almost 52 million tons in the period. Nigeria is likely to add the largest annual production capacity in the continent by the end of 2025F, growing at a CAGR of 7 percent, adding about 20 million tons to cater to much required improvements in infrastructure.

Besides Nigeria, Algeria and Ethiopia are expected to see the largest capacity increases of 5 and almost 6 million tons by the end of 2025F, respectively. Given the rapid pace of new capacity additions, utilization rates are expected to be in the range of 46 percent in 2025F.

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 countriesÔÇÖ 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