Brazilian cement demand slips in July

Cement sales in Brazil decreased by 0.5 per cent YoY to 5.476Mt in July 2023 from 5.503Mt in the year-ago period, according to the national cement association, SNIC.

While the main markets of the southeast and northeast saw a pick-up in demand to 2.573Mt (+1.5 per cent YoY) and 1.088Mt (+6.5 per cent YoY), respectively in July 2023, other regions saw a contraction of sales. The south reported a drop of 10.4 per cent YoY to 0.891Mt, the central-west a 2.2 per cent decline to 0.681Mt and in the north there was a 4.7 per cent fall in sales to 0.243Mt.

The association attributed the decrease in sales to the instability of the country’s economy, marked by a prolonged scenario of high interest rates, high household indebtedness and a drop in real estate launches.

Nevertheless, consumer confidence rose in July for the third consecutive month and the construction confidence indicator remains optimistic following the introduction of new rules of the Minha Casa Minha Vida housing programme.

Exports fell by 35.7 per cent YoY to 18,000t in July 2023 from 28,000t in July 2022.

January-July 2023
In the January-July 2023 period cement demand in Brazil edged down by 1.5 per cent YoY to 35.583Mt when compared with 36.133Mt in the 7M22.

The northeast was the only region that reported a growth in demand, with sales increasing 1.2 per cent YoY to 7.129Mt in the seven-month period. The southeast saw demand contract by 0.9 per cent to 16.649Mt, followed by the south, where sales were down 3.5 per cent YoY to 6.131Mt. In the north, sales declined buy 3.7 per cent YoY to 1.523Mt while in the central-west the market contracted by 4.5 per cent to 4.151Mt.

Exports in the January-July 2023 period dropped by 42 per cent YoY to 134,000t from 231,000t in the equivalent period of 2022.

Outlook
Despite the uncertain economic outlook, SNIC sees the sector’s prospects for the coming months as positive. “The approval of the fiscal framework, the processing of the Tax Reform in the Senate, the resumption of stopped works and infrastructure, in addition to the beginning of the interest rate reduction cycle, are factors that bring greater security and predictability to the sector, and consequently to the economy in 2023,” says the cement association.

“Seasonality in sales in the sector has, historically, a more positive performance in the second half and the fall in the basic interest rate leads the cement industry to project better results and minimise the losses registered until July of this year,” according to SNIC President, Paulo Camillo Penna.