By Mauro Nogarin
The construction industry in the last eight months of 2021 was the only sector that stabilized the economies in Latin America. In general, both public and private works have created very important sources of work, when other productive sectors were affected by the pandemic.
Thanks to the implementation of safety and vaccination measures both in cement production plants and in infrastructure works, the main indicators of the cement and construction industry registered a significant increase compared to 2020 and in some cases reaching the same levels of 2019.
Cement shipments grew 6% year-on-year in October, and in the first 10 months of this year they accumulated a significant increase compared to the same period in 2020.
According to a report prepared by the country’s Portland Cement Manufacturers Association (AFCP), domestic demand was much higher than expected during the last fall and winter and recorded a year-on-year jump of 24% in the first 10 months of the year.
With 1.1 million metric tons (Mt) dispatched in October, during the January-October period they totaled 9.9 million.
At the beginning of the year, the most important companies such as Loma Negra, Holcim, Cementos Avellaneda and PCR, estimated an annual increase of only 5.7%, and in June they projected an increase in shipments of 15% for all of 2021.
According to data from the National Union of the Cement Industry (SNIC), the accumulated production from January to October shows positive figures, reaching 54.8 million tons, thus registering an increase of 7.5% compared to the same period of the previous year.
This trend is the result of the good performance of the real estate market thanks to the better confidence indexes of the consumer and of the construction companies.
The social housing programs financed by the government “Casa Verde Amarela” as well as the international tenders to reactivate public works to build the BR-101/262 highway, the expansion of the different metropolitan lines, allowed the reactivation of the production of the main cement and concrete producing companies in the country.
The reactivation of the construction sector has promoted the production of gray cement at the national level. The National Institute of Statistics (DANE), in its last report for the month of September, was 1,229,000 tons, registering an increase of 7% compared to the same month of 2020 and national shipments were located at 1,164,000 tons, with a growth of 3% compared to September last year.
These positive results are mainly explained by the growth in the activities of the concrete companies, which was 14.3%, contributing 2.8% to the total variation of 3% mentioned.
For the year, gray cement production grew 22% compared to the period from January to September 2020, reaching 10,000,000 Mt, while shipments to the national market were 9,600,000 Mt, which represents an increase of 21.6% compared to the same period in 2020.
Acoording to a report prepared by the Chilean Chamber of Construction (CChC), during the second quarter of 2021, investment in this sector evolved positively, registering an annual increase of 13%, however, the prices of materials increased and the labor shortage in addition to great political uncertainty.
However, the Ministry of Public Works foresees that until Dec. 31 that the construction sector will achieve an increase of 8% compared to the same period of 2020. Where in terms of confirmed public investment until the end of the year it will be less than about $900 million compared to 2019.
Regarding cement production, according to data from the National Statistics Institute (INE), the main companies from January to September went from an accumulated of 3,063,000 Mt in 2019 to 2,650,000 Mt (-13.5%) in 2020 and 3,214,000 (+21.2%) in 2021.
The Mexican Chamber of the Construction Industry (CMIC) warned that inflation in the National Consumer Price Index (INPC) annualized for the construction industry reached an increase of 16% in September, which will cause an increase in the cost of works for the next few months.
However, the main cement producers such as Holcim, Cruz Azul, Cemex, Cementos Moctezuma, GCC and Concretos Fortaleza, were not as affected as the smaller companies that are dedicated to the production of ready-mix concrete.
As for the production of cement in fact, according to the new report of the National Statistics Institute (INEGI), in the first nine months of 2019 it went from 29,800,000 to 30,355,000 Mt (+1.86%) to 34,100,000 tons in 2021 (+12.4%).
Although the political situation in recent months in Peru has been very difficult due to the presidential elections that were held on April 11 and then ended with the second round on June 6, and only on July 19 was it confirmed the victory of Pedro Castillo, the National Institute of Statistics and Informatics (INEI) confirmed that the Peruvian economy grew by 9.7% until September 2021.
The construction sector grew by 12.6% driven by the increase in internal cement consumption (12.3%), given the continuation of the execution of private works, as well as the increase in public investment in the construction sector (14.6%) thanks to the advancement of public works.
In fact, the Ministry of Economy and Finance (MEF) prepared in recent months a bill to continue the different public works that have been paralyzed in the country during 2020. According to MEF data, there are 1,640 projects in the national and regional government that have the budget but have not started execution. These investments total 9 billion for the next four years.
A new report from the Peruvian Chamber of Construction (Capeco) observed that the government must further strengthen its efforts to provide greater legal security to the development of projects to avoid irreversible damage to private companies and workers who carry out their construction.
The statistical report reveals that between October 2020 and September 2021, construction was the productive sector with the highest growth rate. In relation to October 2019, the sector registered an increase of 12%. However, the prices of construction materials increased significantly from August 2020 to September 2021, steel increased 43.6%; bricks, 23%; and labor, 3.3%. However, the only product that did not register an increase in prices was cement.
Regarding the real estate sector between October 2020 and September 2021, the Peruvian Chamber of Construction highlighted the approval of 48,400 mortgage loans, with an increase of 59% compared to the previous similar period and 12% more than the number achieved between October 2018 and September 2019.
According to the new report from the Association of Cement Producers (ASOCEM), in October 2021 cement companies nationwide reached a production of 1,228,000 Mt of cement, thus registering an increase of 7% compared to the same month of the previous year and 7% compared to the previous month (September).
The accumulated production of cement in the last 12 months (November 2020-October 2021), the national cement production reached 12,800,000 Mt, that is, 46% more.
Regarding the production of clinker with 922,000 Mt, the industry showed an increase of 42% compared to the same month in 2021 and 2% more than September 2021.
Local shipments in October 2021 with 1,170,000 Mt registered an increase of 2%, while the total shipment reached 11,880,000 Mt, that is, 2% more than October 2020. While in the last 12 months (November 2020-October 2021) the total cement dispatch was 12,700,000 Mt (44%).
Exports also showed a positive trend where until October 2021 the associated companies exported 17,900 Mt, 23% higher than October 2020 and 5% more compared to September 2021, in addition to exporting 48,600 Mt of clinker, 31% less than the same month of the previous year.
In the last 12 months, November 2020-October 2021, the export of cement and clinker reached 180,000 Mt (21%) and 740,000 Mt (190%) respectively. This is different from the situation of cement imports that in October 2021 reached 54,000 Mt, an amount 53% lower than the similar month of the previous year. Almost 90% of the imported cement was from Vietnam and 115,000 Mt of clinker were also imported, 6% less than the same month of the previous year, where 37% came from Algeria and 35% from Korea.