Coronavirus (Covid-19) Impact on Global Cement Industry

26 June 2020
Global Trade Data

The Coronavirus (Covid-19) has already made a spread out of China and been rapidly affecting international communities since mid-March 2020, particularly in the Unites States, Italy, Spain and France. India is also facing sharp rise in cases to thousands. The impact of coronavirus on cement industry is not that much as compared to other sectors, but disrupted supply chains from China has created a problem among global cement companies. According to Export Genius market research data, China is the biggest supplier of raw materials used in cement production. So, countries like India who is dependent on China to get these materials are facing difficulties in production. Let’s have in-depth focus on how coronavirus impact on global cement industry from initial observations. 

  

Cement Industry in China


China’s cement industry has been affected from the Coronavirus pandemic since early February 2020 when the virus’ effect on the construction sector started to become evident. First, an industry event CementTech was postponed, financial analysts started forecasting negative financial consequences for producers and plants began going into coronavirus-related maintenance or suspension cycles.


Second, major cement companies have identified that not having the staff to make building materials is the one of the biggest disruptions. According to International Monetary Fund, the cement sector together with other industries impacted by coronavirus will decline the growth rate of China by 1%. Also, the Organization for Economic Co-operation and Development (OECD) has forecasted a global 0.5% year-on-year fall in real gross domestic product (GDP) growth to 2.4%, with China and India suffering the worst.


The OECD has blamed the disease control measures in China, as well as the direct disruption to global supply chains for the current situation in cement industry. Other factors include regional decline in international tourism & business travel and weaker final demand for imported goods and services.


Outside China


Besides China, India’s cement industry is also reacting to the coronavirus pandemic at scale. The biggest obvious development has been the lockdown in India that began on 24th March 2020. Given the country’s population of 1.3 billion, the implications for the cement industry are profound. Cement producers and supplies are closing their units due to lockdown. India is the world’s second largest cement production capacity.


For instance, UltraTech Cement, the biggest producer said that it has suspended production at various locations although it added that the situation was dynamic and that it was monitoring it from time to time. JK Lakshmi and Ambuja Cement have also adopted similar measures. Larsen & Toubro (L&T), India’s largest engineering conglomerate, has completely shuttered its Mumbai facility in Powai.


Companies in India were coping so far with the crisis with little major impact seen so far. They are dependent on China for raw material supply but after some minor disruption it was secure. Exports were a different story as it sends around 10% of its production abroad and it has a plant in Germany in Europe it was seeing a challenge due to supply chain disruption.


Other countries like the United States, France and Spain are also experiencing similar situations due widely spread of covid-19 in these countries and complete lockdown. Some global cement companies described the start of 2020 as being strong but that construction projects were being delayed in the United States and that activity in France and Spain was starting to weaken. Other suppliers comment on the situation have been mainly been about protecting staff, working remotely and supporting customers through continued supply of equipment and services.


Major construction projects in South Asia are already reporting delays as Chinese workers have failed to return following quarantine restrictions.  


Top Importing Countries of Cement


According to global trade data of cement, United States stood as the largest importing country of cement in 2018, which shared 10.8% value to total imports. Here is a list of top 10 countries imported cement in 2018.


Country

2018 Value US$ Million

2018 Value US$ %

United States

1,360

10.8

China

652

5.2

Bangladesh

614

4.9

Philippines

540

4.3

France

411

3.3

Netherlands

353

2.8

Ghana

323

2.6

Hong Kong

316

2.5

Oman

241

1.9

Sri Lanka

237

1.9

 

Top Exporting Countries of Cement


As far as cement export is concerned, Vietnam stood as the largest cement exporter in the world, which shared 10.2% to total exports. See chart and table below to understand the global share of countries in cement industry.


Country

2018 Value US$ Million

2018 Value US$ %

Vietnam

1,162

10.2

Thailand

633

5.6

Turkey

614

5.4

United Arab Emirates

552

4.9

Germany

550

4.9

Canada

536

4.7

China

491

4.3

Spain

435

3.8

Iran

382

3.4

Japan

327

2.9

 

Construction activity is expected to experience delays with a knock-on effect for cement demand certainly through the first quarter and perhaps well into the second quarter of 2020. If consumption of cement falls, cement producers will have a fight over the prices. Global cement companies continue to monitor the situation and wishes readers a safe passage through the pandemic.

Is this article helpful. Share with others!   

Add Comments

 
To Get Quick Response
Request a Demo close modal