An overview of global cement sector trends Insights from the Global Cement Report 1 th Edition XXX Technical Congress FICEM-APCAC 2 September, 213 Lima, Peru Thomas Armstrong International Cement Review
Agenda Review of global cement markets in 212 Consumption, production, trade, capacity Industry performance, capacity, prices, emerging majors Global growth scenarios and outlook Focus on key markets & trends in 213 Conclusions Global cement industry trends 3
Global cement demand (1) Global cement demand, 22-213E 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 22 23 24 25 26 27 28 29 21 211 212 213E Demand (Mt) % Change Linear (% Change) 12.% 1.% 8.% 6.% 4.% 2.%.% Global volumes have doubled over the last decade, from 1.8bnt in 22 to 3.7bnt in 212, reflecting a CAGR of 7.4%. Compares to a CAGR of 4.3% in the previous decade (1992-22). Global cement industry trends 4
Regional economic growth trends 2 GDP Growth, World Regions, 22-217E 15 World Advanced economies % Change 1 5 European Union Emerging market and developing economies Latin America and the Caribbean China -5-1 Global cement industry trends 5
Global cement demand (2) (Mn Mt) Evolution of cement demand 22-213E 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 22 23 24 25 26 27 28 29 21 211 212 213E Mature Markets Emerging Markets China Global cement demand is dominated by China (39% in 22 vs 58% in 212) Steady growth in emerging markets Mature markets entered into a period of contraction from 28 Global cement industry trends 6
Regional consumption 22 212 % 13% Western Europe % 6% 3% 3% 4% 4% Central & Eastern Europe 47% 8% North America South&Central America Africa Indian Sub-Continent 5% 8% 5% 4% Middle East South Asia North Asia 61% 5% 7% Australasia 5% 5% 5% Global cement industry trends 7
Top 15 cement consumers (Mt) 35 3 25 2 15 1 5 216 242 79 Top Consumers, 212 69 63 59 58 55 53 51 46 44 43 35 27 Rank by volume 22 212 China 1 1 India 2 2 USA 3 3 Brazil 8 4 Russia 9 5 Iran 14 6 Turkey 15 7 Indonesia 12 8 Saudi Arabia 19 9 Egypt 13 1 Vietnam 18 11 South Korea 5 12 Japan 4 13 Mexico 1 14 Germany 11 15 Global cement industry trends 8
Per capita consumption Per capita consumption, selected countries (kg) 1,8 1,6 1,683 1,581 1,4 1,2 1, 8 6 4 911 77 744 616 56 554 546 524 498 489 438 42 367 342 33 329 327 3 232 22 191 2 129 18 Global cement industry trends 9
Per capita consumption - LatAm Per capita consumption, LatAm v World (kg) 45 4 35 388 33 6 5 3 25 2 294 286 281 265 255 252 231 227 222 217 4 3 15 2 1 5 1 Global cement industry trends 1
Top 15 cement producers 3 222 Top producers, 212 25 247 2 (Mt) 15 1 5 74 73 69 68 6 59 55 53 53 49 47 37 32 Global cement industry trends 11
Top 1 importers & exporters, 212 4Mt 8Mt 4% 7Mt 4Mt 4Mt 13Mt 14Mt 11Mt 9Mt 6Mt 8Mt 9Mt 4Mt 1Mt 12Mt 5Mt 11Mt 8Mt 5Mt 11Mt 96% Non trade Trade Importer Exporter Total of 167Mt traded in 212 (4% of prod.) Top 2 exporters account for 85% of exports Global cement industry trends 12
Contracted capacity, 199-212 16 14 12 1 8 6 4 12 1 8 6 4 2 Contracted capacity by region, 211, Mt 11.2 7.4 4.1.. 5.4 8.9 9.2 2 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 (Mt) Asia (excl. China & India) India Russia Europe North America Latin America MiddleEast Africa 14Mt of new kiln capacity contracted at peak in 26 (ex-china) 46Mt contracted in 211, with no new projects in North America and Western Europe, falling to 4Mt in 212 Global cement industry trends 13
Leading companies Cement capacities of leading producers, 212 (Mta) 4 35 343 3 25 2 218 217 29 15 1 114 96 81 5 65 58 54 45 38 35 31 23 23 19 16 Global cement industry trends 14
YoY Change (%) (Mt) 3. 2. 1.. -1. -2. -3. Top 6 company performance Top 6 Majors, Sales Volumes - YoY Change (%), 26-213 (1H) 6. 5. 4. 3. 2. 1.. 26 27 28 29 21 211 212 1H 213 Net capacity change (Mt), Top 6 Majors, 25-212 Holcim Lafarge Heidelberg Cemex Italcementi Buzzi Unicem 25 26 27 28 29 21 211 212 Global majors hit by collapse of demand in key markets from 28 High debt levels and financial inflexibility resulted in a severe slowdown in capex, M&A, opening up opportunities to the emerging majors Companies now readjusting to new economic realities (ie Cemex/Holcim deal) Votorantim overtakes Buzzi Unicem as sixth largest international company following Cimpor deal Global cement industry trends 15
Global growth scenarios 211 212 213E 214F 215F 216F 217F 5-Yr CARG 7to12 12to17 World 3,585 3,73 3,967 4,157 4,31 4,464 4,599 6.2% 4.3% % Change 8.3% 4.% 6.3% 4.8% 3.7% 3.6% 3.% China 2,5 2,16 2,333 2,438 2,511 2,586 2,638 1.4% 4.1% % Change 1.8% 5.4% 8.% 4.5% 3.% 3.% 2.% World Ex-China 1,535 1,57 1,634 1,719 1,799 1,878 1,961 1.7% 4.5% % Change 5.% 2.3% 4.1% 5.2% 4.6% 4.4% 4.4% Mature Markets 422.35 46.63 47.87 417.2 43.43 442.21 454.81-5.5% 2.3% % Change 2.5% -3.7%.3% 2.2% 3.2% 2.7% 2.8% EM ex-china 1,113 1,164 1,226 1,32 1,368 1,436 1,56 5.2% 5.3% % Change 6.% 4.6% 5.4% 6.2% 5.1% 4.9% 4.9% Global cement industry trends 16
Per capita consumption Cement consumption vs GDP, per capita, 211 12 Libya 1 South Korea Cement consumption per capita (kg) 8 Iran Turkey Vietnam 6 Egypt Morocco Iraq Poland Portugal Russia 4 Thailand Czech Republic Brazil Peru Mexico Spain Hong Kong Germany Japan 2 Indonesia South Africa Nigeria Kenya United Kingdom USA 1, 2, 3, 4, 5, 6, GDP per capita (US$) Global cement industry trends 17
United States in recovery Cement consumption, USA, 22-217F 3% Annual value of construction put in place (YoY % change) 14 12 1 8 6 111 115 12 127 122 111 94 69 7 72 79 81 87 93 99 14 2% 1% % -1% -2% 22 23 24 25 26 27 28 29 21 211 212 4-3% 2-4% Total Construction Residential Nonresidential Monthly cement consumption, USA, 211-13 (Mt) New residential construction, Jul '12 to Jul '13 1,2 9. 8. 7. 6. 5. 4. 3. 2. 1.. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 211 212 213 ' units 1, 8 6 4 2 Starts Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Completions Under construction Global cement industry trends 18
Brazil growth weakens 1 8 6 4 2 39 39 38 34 34 37 41 45 2 Annual cement consumption, Brazil, 21-215F (Mt) 21 22 23 24 25 26 27 52 52 28 29 6 21 65 69 71 75 78 211 212 213 214 215 7. 6. 5. 4. 3. 2. 1.. Monthly cement consumption, Brazil, 212-13YTD (Mt) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 212 213 2% 15% 1% 5% % -5% -1% -15% -2% -3% Annual cement consumption, Brazil, 21-215F (% Change YoY) 14% 16% 11% 11% 8% 7% 7% 2% 3% 5% 5% 1% -1% Per capita consumption reached 33kg Huge infrastructure and housing requirements 82Mt domestic capacity 33Mt new capacity planned between 212-16 Capacity to reach 11Mt in 215 risk of surplus Global cement industry trends 19
Spain hope in sight? 6 5 Spanish consumption, 22-15F 56 56 44 46 48 51 43 2% 1% 2.5 Apparent consumption, Spain, Monthly, 21-13 YTD 4 3 2 1 29 24 2 14 11 1 11 % -1% -2% -3% 2. 1.5 1..5-4%. Consumption (mt) YoY Change 211 212 213 Evolution of construction in Spain, YoY % change, 25-211 Cement price index, Spain, 1996-211 1. 16 5. 15 14. -5. 25 26 27 28 29 21 211 Total Building Total Civil Works 13 12 11 Base 1-1989 -1. -15. Total Construction 1 1996 1998 2 22 24 26 28 21-2. Global cement industry trends 2
Russia growth moderating Annual cement consumption, Russia, 22-215F 8 7 6 5 4 3 2 1 73 7 67 61 63 61 57 52 49 46 44 42 39 36 22 23 24 25 26 27 28 29 21 211 212 213 214 215 2% 15% 1% 5% % -5% -1% -15% -2% -25% -3% -35% Consumption (Mt) YoY Change (%), R/H column Recovery from 29 crisis complete, with double digit growth between 21-12. Economy slowing and demand softening. Per capita consumption below average at 42kg 8% capacity utilises wet process technology 23Mt of new capacity planned by 215 Potential capacity shortages by 22 Global cement industry trends 21
India below expectations 35 3 25 2 15 1 5 Annual cement consumption, India, 21-216F 312 288 266 248 222 232 26 193 166 174 9 111 117 123 136 152 Consumption (Mt) Projections for the Indian cement industry, FY12/13-216/17 Financial year Cement Capacity YoY Change (%), R/H column Consumption (Mt) capacity (Mta) change (%) 212-13 349.6 265.4 213-14 374.9 7% 292.6 1% 214-15 45.1 8% 324 11% 215-16 44.6 9% 358.9 11% 216-17 479.3 9% 397.4 11% Source: Planning Commission, India 25% 2% 15% 1% 5% % GDP growth slips below 5% (lowest rate in decade), as demand growth weakens Capacity doubled since 27 to 35Mta (212) Improving capacity utilization (73%), but additional 13Mt capacity planned over current 5-yr plan (213-17) Land acquisition, environmental permitting, slower demand will slow aggressive expansion plans Per capita consumption very low at only 191kg vs 513kg global average AFR usage only 1% Global cement industry trends 22
China - resetting to sustainable course? Annual cement consumption, China, 21-215F 3, 25% 2,5 2, 1,5 1, 719 857 976 1,59 1,2 1,32 1,372 1,6 1,85 2,5 2,16 2,333 2,438 2,511 2% 15% 1% 5 5% 22 23 24 25 26 27 28 29 21 211 212 213 214 215 % Consumption (Mt) YoY Change (%), R/H column Growth tripled from 72Mt in 22 to 2.16bnt in 212 (CAGR11.6%) 58% of global consumption Per capita consumption reached 1518kg in 212 (x3 global av.) Future growth reset to more sustainable course, with CAGR 4% over 212-17F Demand is expected to peak this decade, after which per capita levels will gradually revert toward average global levels Overcapacity, intense competition, low utilization rates impacting on profitability Global cement industry trends 23
213 YTD a mixed performance 25% 2% 15% 1% 5% % -5% -1% Cement market indicators, selected countries, 1H13 19% 13% 11% 1% 9% 7% 7% 7% 3% 1% % % -1% -2% -3% -7% -8% -15% -13% -2% -25% -3% -18% -23% -24% Turkey Nigeria Peru China Saudi Arabia Indonesia Argentina Russia India Brazil USA UK Colombia Mexico Egypt France Germany Morocco Italy Poland Spain Global cement industry trends 24
Global Cement Report 1 th Edition New 213 edition out now THE GLOBAL CEMENT REPORT TENTH EDITION Fully revised and updated 1 th Edition released in 213 Available now! Includes: Cement statistics: 199-212 165 country profiles World summary Forecasts 213-14 22-year database Published by ICR Email: subscribe@cemnet.com Website: www.cemnet.com Global cement industry trends 25
Thank you Thomas Armstrong Managing Editor International Cement Review Email: t.armstrong@cemnet.com Website: www.cemnet.com Global cement industry trends 26