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is rising once again (a better than expected
3.9% in April), other sectors, such as retail
continue to show weakness with figures
being 7.5% down in April. There are also
concerns over rising unemployment, which
reached 6% in April, according to official
figures. However, the true figure might be
double the official estimate as many migrant
workers have yet to return to the cities. Even
the
Global Times
, a state-backed news agency
highlighted concerns over employment:
“it will be nearly impossible for Chinese
employees in the private sector to earn as
much salary as they did in 2019.” According
to a March survey by Tsinghua University,
some 85% of private enterprises will struggle
to survive over the coming months, leading
to likely bankruptcies and a further rise in
unemployment.
Regarding cement, the industry has
undergone a period of consolidation and
reorganisation over recent years. In 2019,
China’s cement clinker production output
repeated a record high of 1.52 billion t.
Accounting for imports of roughly 20 million t,
total clinker consumption reached 1.54 billion t
last year. The domestic market has moved
into pattern of ‘two super, many strong’, with
China Building Materials Group and Conch
Cement fulfilling the roles of ‘super producers’
and the ‘many strong’ including companies,
such as: Jinyu Group, China Resources
Cement, Taiwan Cement, Red Lion Group,
Sunnsy Group, Asia Cement, and Tianrun
Cement. Overall, China’s top 10 cement
manufacturers produce 57% of the country’s
entire output.
According to the World Bank, India’s
economy is expected to contract by 3.2%
in fiscal year 2020 – 21, roughly in line with
the outlook for the overall global economy
and a reversal of the previously anticipated
1.5 – 2.8% growth. The World Bank noted
that the “stringent measures to restrict the
spread of the virus, which heavily curtail
short-term activity, will contribute to the
contraction”, but also argued that India’s
economy should recover swiftly in 2021 – 22
with a growth rate of 3.1% if the pandemic
is dealt with. The IMF, however, takes a
different view and expects the Indian economy
to still grow by 1.9% in 2020 – 21. Former
Chief Economic Adviser to the Government
of India, Arvind Subramanian, branded both
the IMF and even the World Bank’s gloomier
prediction as “optimistic” – considering that
some estimates (Bernstein) actually show as
much as a 7% contraction in the economy,
Subramanian may be right.
India’s cement industry is the second largest
in the world, accounting for roughly 8% of
global installed cement production capacity
(502 million tpy as of 2018) and employing
more than 1 million people. The sector has,
however, faced oversupply issues with per
capita consumption being as low as 200 kg,
compared to a global average of 500 kg.
Unfortunately, the COVID pandemic looks
set to weaken both demand and supply;
CARE Ratings has estimated that production
is likely to fall by 25 – 30% as a result, with
capacity utilisation falling to just 40 – 45%.
The nationwide lockdown was imposed at the
height of India’s annual construction period –
with the monsoon season now approaching
(June – September), construction demand is
likely to be even further muted over the coming
months, thus leading to continued reductions
in cement demand.
In 2019, Bangladesh’s economy was
booming, posting a record high growth rate of
8.1% – in the years since 2009, the economy
has grown by 188% and GDP per capita rose
from around US$600 to over US$1900. The
country is also rapidly urbanising, with 48% of
its population expected to be living in towns or
cities by 2030. All of these factors combined
to produce a market of more than 30 million
middle class citizens. Of course, growth in
2020 is likely to be muted by the pandemic,
with the IMF predicting a fall to just 2% this
year.
In line with the rest of the country’s output,
Bangladesh’s cement industry has grown
significantly over recent decades, moving from
roughly 95% of demand being met by imports
in the 1990s to 14 companies exporting
cement today. Much of the growth was
supported by major infrastructure development
projects, which saw per capita consumption
rise from 95 kg to nearly 200 in 2018.
The World Bank regards the Philippines as
one of the most dynamic economies in the
Asia Pacific region. Increasing urbanisation,
a growing middle class and a large, relatively
young population has helped ensure strong
consumer demand and a vibrant labour
market. The country was able to sustain an
annual average growth rate of 6.4% from
2010 to 2019 and is well on the path to
progressing from a lower middle-income
country (with a GDP of 3830 per capita) to an
upper middle-income country with a GDP per
capita in the range of US$3956 to US$12 235
in the near future. Despite the challenges
posed by COVID, and an inevitable slowdown,
the country is expected to rebound gradually
as conditions improve in 2021 – 2022.
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World Cement
World Review 2020