Brazil's cement market expands 6% in 2021

Brazilian cement sales totalled 4.8Mt in 2021, representing a 1.6 per cent increase YoY, according to SNIC, the national cement association. As a result, the industry closes 2021 with full-year domestic sales of 64.3Mt, up 6.4 per cent YoY.

In addition, exports advanced 6.9 per cent to 31,000t in December 2021, resulting in a 52.4 per cent hike in full-year volumes to 416,000t.

The continuity of construction and renovation through self-construction, real estate works and an incipient resumption of infrastructure works were quoted as the drivers of the growth in the domestic cement market.

The highest growth was recorded in the southern region, where infrastructure construction picked up, particularly in the state highways and urban pavement segments. The northeast, which saw the largest growth in 2020 as emergency aid was provided, showed the worst performance in 2021 as aid was reduced.

“Factors behind the exceptional performance in 2020 began to weaken in 2021. The excellent performance of retail in 2020, with a focus on renovations and construction carried out by the autobuilder, lost steam in 2021. The high level of unemployment, the decrease in income, the significant increase in inflation, interest rates and the high indebtedness of families were the main reasons for the slowdown in cement consumption, culminating in a growth of 6.4 per cent in 2021,” said SNIC President, Paulo Camillo Penna.

“The reduction in the pace of household consumption, hampered by lower incomes, high unemployment and the advance of inflation, affected the performance of the economy in 2021, which failed to achieve a consistent and widespread recovery, impacting expectations for 2022. Great inflationary pressure not only impacted families, but also the production chain. There was a systemic increase in production costs, with higher prices for raw materials and commodities,” according to SNIC.

Outlook
The construction sector starts 2022 in a much more challenging scenario. Brazil’s economy is in technical recession with interest rates rising and impacting real estate financing. In addition consumer purchasing power is trending down, resulting in shift of focus from house construction and renovation to essential goods such as food and clothing.

Due to the country’s political situation and economic challenges, SNIC expects cement demand to be largely level, between 0-0.5 per cent in 2022.

“In this sense, the return of investment in infrastructure and housing by the government is essential. Throughout the year, we noticed a timid resumption in infrastructure works, mainly in the southern region. Combined with the good results of the concession auctions held throughout the year, infrastructure can regain its very important role in the country's development. According to the Ministry of Infrastructure, 39 concessions were carried out with a contracted value of BRL37.6bn and the forecast for 2022 is to auction another 50 assets with more than BRL165bn in investments,” said the Brazilian cement association.

The new Omicron variant is also striking fears of new restrictions on movement and the closure of trade, providing further uncertainty going forward.