Peru's cement market contracts 2% in February

Peruvian cement dispatches slipped by two per cent YoY to 0.89Mt in February 2024 when compared with the previous year’s equivalent period, said the country’s cement association, ASOCEM. Of this total, the association’s members supplied 0.815Mt, down from 0.856Mt in February 2023.

Cement production in Peru fell five per cent YoY to 0.818Mt in February 2023 while clinker output was down 17 per cent YoY to 0.633Mt in the same period.

Domestic production was supplemented by 4000t of cement, down 92 per cent YoY, and 64,000t of clinker, representing a YoY decrease of 27 per cent in February 2024. Cement imports all originated from the Tacna terminal in Chile. They were sold at a CIF price of US$126/t, up 16 per cent YoY when compared with February 2023.

Cement exports declined by seven per ent YoY to 10,000t in February 2024. Clinker exports advanced 109 per cent YoY to 71,000t in the same period.

January-February 2024
In the first two months of the year, total domestic dispatches were 1.91Mt, up 4.3 per cent YoY from 1.832Mt in the January-February 2023 period.

Cement production slipped three per cent YoY to 1.742Mt in the 2M24 from 1.796Mt in the 2M23, while clinker production dropped 13.8 per cent YoY to 1.49Mt from 1.728Mt.

Cement exports in the first two months of 2024 totalled 20,000t, a drop of 23.1 per cent YoY from 26,000t in the same period of 2023. Meanwhile, clinker exports jumped 48.6 per cent YoY to 104,000t from 70,000t in 2M23.  

Cement imports fell 35.2 per cent YoY to 35,000t from 54,000t, while clinker imports increased 43.2 per cent to 126,000t from 88,000t.

Outlook
Growth in domestic dispatches in the first two months of 2024 is welcome after a difficult 2023 when local sales dropped 11 per cent. This reflected wider weakness in the Peruvian economy and difficulties in the construction sector. GDP contracted 0.6 per cent YoY for 2023, according to the national statistics institute, INEI, while construction output shrank a notable eight per cent.

Self-construction is an important driver of cement demand in Peru, with bagged sales accounting for roughly 70 per cent of total demand. As pressure on households moderates, demand for cement is likely to improve. Cooling inflationary pressures, including important food and energy prices, suggest interest rates will trend lower. The Central Reserve Bank of Peru held interest rates at 6.25 per cent in March, down from 7.75 per cent a year earlier.

Meanwhile, GDP is forecast to grow three per cent in 2024, according to the central bank, with public investment expected to grow four per cent, up from just one per cent in 2023, as the government looks to address the country’s infrastructure deficit. Major projects in 2024 include Line 2 of the metro network of Lima and Callao, Chancay port terminal and expansion of the Jorge Chavez international airport. The construction sector as a whole is forecast to expand 3.2 per cent.

With a number of new integrated or grinding plants coming online in the last couple of years sustained strong demand for Peruvian cement exports is necessary to ensure capacity utilisation rates are sustained. GDP in Chile, a key cement and clinker export market, is forecast to expand two per cent in 2024.