Brazilian cement sales reach 54.5Mt in 2019

Domestic cement sales in Brazil advanced 1.6 per cent YoY to 4Mt in December 2019, according to the country’s National Cement Industry Union (SNIC). In terms of sales per business day there was a 2.7 per cent YoY rise when compared with 2018. Apparent consumption in December was up 1.5 per cent YoY to 4Mt.

For the full-year 2019 sales increased 3.5 per cent YoY to 54.5Mt, “the first positive result since 2014”, says SNIC in a statement. When viewed as sales per business day, the advance was 3.3 per cent.

Paulo Camillo Penna, president of SNIC, attributes the upturn to an improvement in the macroeconomic environment and the resumption of the real estate market. “FGV's construction confidence index has been growing since June and reached, in December, the highest level since 2014, signalling sustainable growth in the sector,” says Mr Penna.

While inflation and interest rates reached the lowest level, brought greater optimism to the market, the main driver of the recovery of cement consumption was the real estate sector, especially the residential one, according to SNIC. The number of units financed for construction grew by 38 per cent accumulated until November. In the same vein, there was a 17 per cent increase in residential launches, accumulated up to September, with emphasis on properties aimed at the middle and upper classes.

“We had an effective reduction in the real estate credit interest rate and the introduction of new funding, which uses fixed interest rates plus the IPCA variation, reducing the financing lines. There is great expectation regarding the launch of a new type of real estate credit without the correction already announced by Caixa Econômica,” commented Paulo Camillo.

However, there was marked regional variation in cement sales growth. While sales in the southeast grew by 3.6 per cent YoY to 26Mt in 2019, driven by an improved performance in the São Paulo market, sales in the north slipped 1.6 per cent 2.4Mt over the period. The decline has been attributed to the shift of production from the north to the northeast and midwest. In the northeast sales were up 2.7 per cent YoY to 11Mt while in the midwest they rose 6.3 per cent to 6.1Mt in 2019.

Despite the positive sales trend, production capacity utilisation is reported at around 55 per cent.

Exports
Exports surged 80 per cent in December 2019 to 18,000t from 10,000t in December 2018. For the full-year, export shipments advanced 44.9 per cent YoY to 142,000t from 98,000t in 2018.

Outlook 2020
For 2020 growth is expected to be similar to 2019. “The crisis that started in 2015 was strong, the industry lost more than 25 per cent of production and more than 20 units were closed in the period. Therefore, the recovery will be gradual and will depend on the maintenance of real estate growth, favourable macroeconomic environment and the resumption of infrastructure investments,” forecast Paulo Camillo.