Three major Latin American countries, Brazil, Peru and Argentina, released full-year consumption figures for 2012 this week with two showing YoY gains while demand in the third faltered.
Brazil
With Brazil's economy continuing its lull, construction activity is expected to have grown by five per cent last year, thus underperforming its significant potential. Fundamentally, the opportunities for the construction sector are immense given the country's housing and infrastructure needs and Brazil is set to put its best foot forward with high-profile sporting events, elections in 2014 and the final year of the PAC II all likely to prompt action from the government over the 2013-14 period.
Over 2012, cement demand continued to increase albeit at a slower growth rate than in 2011. Preliminary data and market estimates published by Sindicato Nacional da Industria do Cimento (SNIC) showed that cement dispatched to the local market by Brazilian manufacturers reached 68.3Mta, representing an increase of 6.9 per cent from 2011. Imports for the year, according to data from SECEX/MDIC, fell 10.4 per cent YoY in 2012 to 977,000t (2011: 1,091,000t). When imports are added to domestic production, total cement consumption in Brazil amounted to 69Mt, up 6.6 per cent YoY. In 2011, Brazil achieved sales of 65Mt and a YoY growth rate of 8.3 per cent.
Programmes to increase installed capacity continue apace with Votorantim leading the charge as it brings new integrated plants and grinding facilities on-stream across the country. Its capacity last year stood at 29-30Mta and is expected to reach 38-39Mta by the end of the process. Earlier this week, Lafarge also announced at a meeting with Brazil's president Dilma Vana Rousseff that it would invest US$500m in its local cement interests to 2018, including a new research centre. CEO Bruno Lafont said organic investments will be made to keep in line with local market expansion. "Brazil has true potential for growth. The investments needed in infrastructure and in the housing sector show that the country has much margin for growth," he said. Furthermore, at the end of last year, local press also reported that Lafarge plans to build a 0.75Mta cement plant in Rio de Janeiro which will receive funding from the city's government under its Riodindustria programme for industrial projects. A new production line at Cimpor's Cezarina plant and the company's greenfield Caxitu project in Paraiba State also count among the expansion projects being carried out in the country.
Peru
Recent economic growth in Peru has been led by the construction sector where recent data shows that after four consecutive months of growth building activity expanded 16.8 per cent in November 2012 from the year earlier. A booming mining sector has been a major driver of this increase, while private investment has also played a significant role.
Cement deliveries in the Peruvian market reached 9.57Mt in 2012, a 15.4 per cent rise when compared with 2011, according to cement manufacturers' association Asocem. Exports more than doubled from 67,512t to 200,485t despite a buoyant domestic market. As a result, total cement dispatches expanded by 16.9 per cent to 9,772,404t from the previous year's 8,361,633t
Commenting on this strong performance, senior analyst at the Economic Research Department of Scotiabank, Pablo Nano, said: "There was an increase in private investment in the real estate segment, specifically for the construction of houses and shops."
Domestic producers are making the most of the current demand in the market. Cemento Andino and Cementos Lima agreed to merge in July 2012, to create the largest player in the local market, Union Andina de Cementos (UNACEM) with a cement capacity of 6.6Mta. Cemex is also building a new US$230m, 1Mta production facility in the country while UNACEM and Caliza Cemento Inca are also expanding their respective production bases.
Argentina
Argentina's construction activity has continued to lag as tepid economic growth has taken its toll. The central bank has said it expects economic growth of just two and 4.6 per cent in 2012 and 2013, respectively, down sharply from the 8.9 per cent growth posted in 2011. Latest data shows that November's construction index fell 0.9 per cent on the month and was down 5.3 per cent on the year, according to the national statistics agency index.
After seeing double-digit rises of 10 and 12 per cent in 2010 and 2011, respectively, last year cement consumption saw a more challenging year. Statistics from the Asociacion de Fabricantes de Cemento Portland (AFCP) show demand declined 8.16 per cent YoY from 11.39Mt in 2011 to 10.46Mt in 2012.
Total shipments from Argentina (domestic sales and exports) were down 7.8 per cent from 11.60Mt in 2011 to 10.69Mt in 2012. Exports remained stable in 2012 at 236,807t compared to 235,412t in 2011. According to AFCP forecasts the near-term outlook is expected to remain unchanged.
