The Cement Industry in Colombia

The Cement Industry in Colombia Will Have a Positive Future in the Short and Medium Term.

By Mauro Nogarin

Cement plant of Puente Aranda with a production capacity of 220 m3/h. Credit: Argos Group

In addition to the difficulties the construction market registered over the past two years, the cement industry also had its ups and downs. However, factors such as the start-up of new cement plants, the decrease in imports and the recovery of domestic prices suggest that the cement industry will have a positive future in the short and medium term.

In fact, although the current economic situation of the domestic market presents certain difficulties, the cement plant of Grupo Corona in Sonsón (Antioquia) will be inaugurated this month (July 2019), and will operate in partnership with the Spanish group Molins with an installed capacity of 1,350,000 tons.

According to figures from the National Administrative Department of Statistics (DANE), in 2018, 12,452,200 tons of cement was produced, registering an increase of 153,400 more than in 2017, showing a slight recovery. The dispatch of the input to the different regions of the country was 0.2%, with the shipment of 12,010,000 tons.

Year-Over-Year

In the last 12 months, in the period May 2018-April 2019, the production of gray cement totaled 12,512,000 tons, registering an increase of 2% in relation to May 2017-April 2018. On the other hand, shipments to the domestic market reached 12,064,000 tons, presenting an increase of 0.9% compared to the accumulated between May 2017 and April 2018.

In the period May 2018-April 2019 compared to May 2017-April 2018, the increase to concrete companies (6.9%) added 4.7 percentage points to the variation of gray cement dispatched in bulk (1.6%). On the other hand, the variation of 0.5% in gray cement shipments was mainly due to the Marketing category (0.6%), which contributed 0.5 percentage points.

In the period January-April 2019, cement production reached 4,023,000 tons, registering a growth of 1.5% compared to the same period of the previous year. And the shipments to the national market accumulated 3,933,900 tons, resulting in a variation of 1.4% with respect to the period of January-April 2018. As a whole, this confirms good market stability for the cement industry.

In April 2019, gray cement production at the national level was 971,000 tons, which represented a decrease of 6.2% compared to the same month of 2018. In the fourth month of 2019, 991,000 tons of gray cement were shipped to the national market, which meant a decrease of 3.9 % compared to April 2018.

Ready Mixed

As for the production of ready-mixed concrete in the period of January-March 2019, the production of ready-mixed concrete reached a volume of 1,674,000 cu. meters, presenting a variation of 6.8% compared to the same period of the previous year, in which 1,567,000 cu. meters were produced.

Figure 2: PPI for Construction Materials

During April 2018 – March 2019 (last 12 months), the production of ready-mixed concrete reached 6,773,000 cu. meters, with a variation of 0.8% in relation to the April 2017 – March 2018 period, in which 6,716,000 cu. meters were produced.

Future Growth

The cement market in Colombia has the potential to grow. This is due to exports to other markets such as the United States, and some countries in the Caribbean and Central America. At the end of 2018, the market had the installed capacity of 21.7 million tons, generated by 13 companies (see Figure 1).

This helped achieve one of the highest per capita cement production indexes in the Latin American region in 2018, which was 249.9 kg per inhabitant with an increase of 0.1%, with respect to the production of 2017 (249.5 kg per inhabitant).

Figure 3: Distribution to Concrete Companies

Although the producer price index (PPI) in recent years was minimal, according to the last statistical bulletin from DANE, the PPI for construction materials presented an increase of 0.17%, compared to December 2018 (Figure 2).

Public Works

Regarding public works, surely one of the factors that played a very important role in the demand for cement were the 30 projects of Fourth Generation Toll Roads (4G), commissioned by the national government, consisting of the construction of more than 1,370 km of double roads, 141 tunnels and 1,300 viaducts. However, these works suffered several delays during the year due to developments in the national economy.

In the private sector this year, the demand for cement will also increase thanks to the development of housing projects financed by the government as part of its “Mi casa Ya” (My House Now) plan. This involves subsidy state bank loans at a very competitive interest rate.

This program also extends to commercial projects such as the construction of markets, warehouses and offices, an area that as a whole increased 3.3% in 2018. It is worth highlighting the data from the Colombian Chamber of Construction (Camacol) on this type of construction, which is expected to start 2.8 million sq. meters in 2019.

Cement plant of Boyacá with a annual production of 500.000 tons. Credit: Holcim

The distribution item with the highest increase was that of the concrete companies which reported an increase of 4.4%, while builders and contractors decreased by 4.5%. (Figure 3). 

Mauro Nogarin is Cement Americas’ Latin American contributor. From 1997 to 2001, he was a reporter for the Italian news agency ASCA and followed the economic events of ECOFIN. At the same time, he began a strong partnership with the Italian magazine Focus with issues related to European scientific research. Back in Italy after six years of residence in the city of Heidelberg (Germany), he worked for the weekly Stern and Bild Zeitung. Since 2005, he has lived in South America (Bolivia) and worked with the Italian geopolitics review Limes, the Italian gas and oil journal Staffetta Quotidiana, the Colombian oil magazine Petroleo Internacional, the German RE Sun and Energy, the U.S. magazine Renewable Energy World (Pennwell), the World Energy Project (Università di Bologna), Pan Americana Construction magazine and Worldoil magazine. He can be reached at [email protected].