It is expected that there will be a surge in residential and commercial construction in China due to the rising populations and disposable income.
The global concrete and cement market recorded a CAGR of 4.05% between 2008 and 2012 however, growth was subdues by an 11.8% decline in 2009. Construction activity slowed and, consequently, the demand for concrete and cement slowed in 2009. The global concrete and cement market is expected to record a CAGR of 8.49% over the next 5 years, in anticipation of a growing global construction industry, infrastructure development undertaken in emerging economies, and the easing of the economic crisis in Europe.
Asia-Pacific Regional Market
The Asia-pacific concrete and cement market valued US$261.1 billion in 2012, recording a CAGR of 14.78% between 2008 and 2012, outperforming all other regional markets. Chine constituted the largest share of the regional market, with a 71.4% share in 2012, followed by India and Japan, which constituted shares of 10.3% and 6.9% respectively. Large-scale investments in construction will drive the demand for concrete and cement. China is in need of housing and better infrastructure networks to cope with rapid urbanization; nearly 10 million workers migrate from rural areas to urban centers annually. In India, investments will be made in public-private projects to construct highways, railways and ports. The world’s second-most populous country is also expected to record a surge in residential and commercial construction, with rising population and disposable income. Japan is expected to invest heavily in the re-development of infrastructure, following the floods of 2011. The Indonesian construction industry is also expected to record substantial investments, supported by urbanization, income growth and government efforts to improve infrastructure, as part of its mission to take the country’s economy into the global top-10 by 2025. All this will drive the demand for concrete and cement in the region. Overall, the concrete and cement market in the Asia-Pacific region is expected to record a CAGR of 10.37% over the next five years.
Chinese construction trends
In 2013 alone, 4.7 million housing units will be completed, and the construction of 6.3 million affordable housing units will begin. Infrastructure construction is expected to record strong growth, with the Ministry of Transport earmarking CNY6.2 trillion (US$954 billion) for the construction of roads, railways, waterways, aviation and logistics.
Chinese cement production capacity increased rapidly from 595.0 million tons per year, at the end of 2000, to 2.2 billion tons per year in 2012. The Chinese 11th five year plan (2006-2010) included measures for the overhaul of the cement industry. With an investment nearing US$10.0 billion, approximately 696 dry process cement lines were put into operation from 2006 to 2010.
Economic slowdown in developing Asia, slow recovery in the US and uncertainty in Europe is expected to moderate short-term growth
The demand for concrete and cement is a derived one, mainly based on investments in the real estate business, industrial activities and infrastructure construction. Cement consumption trends follow the same path as other widely traded economies and have a close correlation with economic expansion. It is natural that emerging economies, as they urbanize and industrialize, now consume 90% of the world’s cement output. In richer, more mature markets, construction activity has remained relatively subdued, especially since the financial crisis of 2008-2009, and the demand for concrete and cement products has been in long-term decline. While the Asia-Pacific region accounts for the bulk of the expansion of the global construction industry since the financial crisis, a deceleration in Asian economies such as China and India, has moderated the growth of the concrete and cement market.