The Argentinian cement market is bracing itself for another difficult year. The bottom of the market is predicted to fall through completely in 2025 after a hazardous 2024 when public infrastructure works came to a grinding halt. Construction of Argentina's CAREM-25 small modular reactor, for example, which is due to be online by 2028 has been set back as 153 workers were laid off in August 2024, despite the project being 85 per cent complete.

Figures released this week by statistics agency Indec state that construction supply sales dipped by 27.2 per cent in 2024, or 6.6 per cent YoY in December. Sales of bricks, ceramics, Portland cement and lime fell 1.25 per cent compared to November 2024. 

The country's recession has already spilt over into the cement sector. Argentina’s largest cement producer, Loma Negra, already saw cement consumption fall by 20 per cent in October 2024 and its 3Q24 net sales declined by 21.2 per cent YoY.

Moreover, the downward trend in cement sales continued with a double-digit collapse in demand in  2024, according to the Associación de Fabricantes de Cemento Portland (AFCP). For the full-year 2024, cement sales fell 23.9 per cent to 9.56Mt in 2024 due to collapsing domestic demand. The trend was also reflected in the country's cement output. Production has been subdued with the full-year level falling by 23.9 per cent to 9.556Mt in 2024 from 12.56Mt in 2023. 

The deepening crisis
Matters began to slide when President Javier Milei decided on 10  December 2023 to scrap the Ministry of Infrastructure, transferring its responsibilities to the Ministry of the Economy. The aim was to encourage private companies to take up more of the burden of infrastructure projects. However, local sources agree that the work cannot be implemented by the private sector as it is not profitable and there is an acute lack of available finance.

As a result construction activity collapsed quickly between March and June last year when there was a total paralysis of national public works, according to Gustavo Weiss, president of the Argentine Chamber of Construction. A total of 3500 public works were halted with non-payments since November 2023, causing the loss of nearly 100,000 direct jobs.

“The sector is going through a very serious economic situation, as a result of the total paralysis, with some exceptions, of national public works that has severely affected employment and has endangered the very continuity of the companies,” said Mr Weiss at the time.

Slow market expansion
There has been little growth in Argentina’s cement sector in recent years and while Loma Negra has invested in its L’Amalí cement works, which expanded its cement capacity 2.7Mta to 4.9Mta in 2021, greenfield projects have been absent. Holcim Argentina plans to add 0.51Mta cement capacity to its Malagueño plant but this project, along with the 0.5Mta expansion of the Petroquímica Comodoro Rivadavia plant appear to have been delayed due to the prevailing market conditions.

Meanwhile, speculation about the sale of Mover Participações’ Loma Negra have not yet come to fruition. Until cement consumption picks up, a sale would be unlikely to reach anywhere near its potential market value.