The cement has hardened – Newspaper Kommersant No. 58 (7503) dated 04/05/2023

As expected, stagnation in the construction industry led to a decrease in cement production in Russia: its consumption in the first quarter fell by 5–8%. Together with a surplus of capacities and a 1.5-fold increase in the volume of product imports, this may lead to the shutdown of three or four cement plants, market participants admit. The main hopes of manufacturers are for government orders. Its volumes are still small, but the demand for cement itself, according to experts, is declining, including due to the development of alternative technologies.

In January, according to Soyuzcement (combines large holdings of the industry), 2.6 million tons of cement were produced throughout the country, which is 11.3% less year on year. In February, according to forecast data, 3.2 million tons were produced, which is 5.9% less year-on-year. The decrease in production volumes was caused by a reduction in consumption, which in January amounted to 8.1%, to 2.5 million tons, in February – 8.6%, to 3.2 million tons. For the entire first quarter of 2023, consumption decreased by 5% year-on-year, although a year ago, on the contrary, there was a double-digit growth, said Vladimir Guz, managing partner of SMPRO.

Soyuzcement does not expect a recovery in consumption growth throughout this year, according to the results of which, according to the baseline scenario, it will decrease by 10% in the whole country, and by 20%, according to the pessimistic one. SMPRO also predicts a decrease in cement consumption in Russia by more than 10% this year. In Soyuzcement, this is associated with stagnation in the construction industry. In January, Russia actually launched half as many new projects as a year ago (see “Kommersant” dated February 27). “The negative dynamics will continue and affect all segments of the construction industry,” agrees Denis Usoltsev, head of the Cemros technical marketing department. The only exception, according to analysts from Soyuzcement, has so far been the Far East, where cement production rose by 19% in January due to significant construction volumes.

But declining consumption is not the industry’s only problem. According to SMPRO estimates, imports of cement from abroad to Russia increased by 45% in the first quarter.

Soyuzcement notes an increase in imports in January by 54.1%, to 0.12 million tons, they note growing supplies from Iran, Kazakhstan and Belarus. The total import of cement in 2023 may reach 5-7 million tons against 2.2 million tons last year. According to analysts, against the backdrop of a surplus of own capacities, this may force a number of manufacturers to close enterprises. Denis Usoltsev believes that three or four “wet” cement plants (raw materials are crushed using water) are at risk: due to high costs, their production costs become uncompetitive. In this regard, Soyuzcement is in favor of introducing measures of non-tariff regulation of imports.

At the same time, the export of Russian cement in January decreased by 16% yoy, to 0.07 million tons, which is associated with sanctions on supplies to the European Union, the association explains. In February, the figure was almost equal to the same period last year. In general, the volume of exports in 2023 will be comparable to the past, analysts expect.

According to Rosstat, which is cited by SMPRO, in February the average cost of cement without delivery in Russia was 5.08 thousand rubles. per ton, for the year the average price increased by 17%. But Vladimir Guz says that the main increase occurred at the peak of the construction season.

Soyuzcement points to an increase in production costs: gas, electricity, coal have risen in price over the year, and transportation tariffs have increased. Vitaliy Bogachenko, director of corporate relations at Cementum (formerly Holcim), estimates cost growth at 17%.

Positive factors for the market, according to Soyuzcement, may be related to the construction of state programs: renovation of the housing stock, projects for the integrated development of territories, an increase in the share of construction of cement concrete roads, the implementation of the national project “Housing and urban environment”. The volume of state orders in construction is at a high level, including through work in the annexed territories, but the demand for cement itself is declining, says Mikhail Burmistrov, general director of Infoline-Analytics. He notes that developers, concrete and precast concrete manufacturers are now increasing the proportion of additives and reducing cement, and alternative technologies are also actively developing, including the use of steel frames and wooden housing construction. The expert also draws attention to the growing share of individual housing construction, where the need for cement is much lower, and the long-term stagnation in the commissioning of multi-apartment housing.

Alexandra Mertsalova