EUROPE CEMENT MARKET

RECENT DEVELOPMENTS

• Global contraction / reduction in cement production is estimated at -3.5% in 2020, while in Europe it is estimated at -6.3% (EU 27).
• In 2021 and 2022, a rebound of the economy is expected with forecasts at 5.5% and 4.2% respectively at global level, and 3.7% and 3.9% respectively in the EU27.
• The European cement sector has set an objective of reaching net zero greenhouse gas (GHG) emissions by 2050. It also aims to reduce emissions in the sector by 30pc by 2030 for cement and by 40pc down the value chain. The strategy involves all elements of the cement value chain: clinker, cement, concrete, construction and (re)carbonation.
• The new European Commission announced its flagship “Green Deal” aimed at turning the EU into the first carbon-neutral continent by 2050. The Green Deal presents a number of challenges for European industry and for the cement industry in particular.
• The Green Deal suggests a life cycle approach in developing product policies to foster the uptake of low carbon solutions.
• The Euroconstruct area reached EUR 1.60 trillion value in 2018, split into 38% for new buildings and 41% for building renovations, and 21% from civil engineering. These proportions are temporarily changing, however, with civil engineering becoming a major driver between 2017 and 2021 and new residential buildings falling behind in all regions and reappearing as a leading segment after 2021.
• HeidelbergCement has strengthened its climate neutrality commitments by joining the Stiftung 2 support group, a network of private companies lobbying for climate goals. The group says that it wants to develop cross-sector approaches and concepts for Germany and Europe in order to make climate protection a sustainable and successful business model.
• Vicat recorded net sales of Euro2.07bn in the first nine months of 2020, up slightly from Euro2.06bn in the first nine months of 2019. Sales rose in Africa by 23% to Eur 198m from Euro 161m, in Europe (excluding France) by 8%.

OVERVIEW

The European Cement industry accounted for xx Metric tons/year of cement capacity with production of cement ranging from xx Metric tons/year in 2019 and is further forecasted to reach about xx Mt/year by 2025 at a CAGR of xx%.

 

Cement is obtained by grinding cement clinker and, in some cases, supplementing it with additions. Spain, Italy, Germany, France and Poland are the largest producers of cement clinkers in the EU.

 

Before the pandemic, the industry was not operating at full capacity; with the global economic slowdown, plants were expected to see further drops in utilization rates. While companies are likely to finish committed expansions that were delayed due to lockdowns, and start new projects beyond 2021 depending on the pace of economic recovery.

 

As countries began to reopen post-pandemic, consumption of cement and concrete is expected to gradually recover, fueled by economic growth, urbanization, and population growth, especially in emerging markets. The industry’s biggest challenges and opportunities are going to be seen in the longer-term.

 

To survive and flourish, companies in Europe will need to prioritize sustainability and raise their environmental standards as governments, investors, and the general public increasingly are pushing companies to reduce their carbon footprint. Cement companies that prioritize sustainability are likely to emerge as the leaders in the next cycle.

 

Many companies are already taking significant measures towards decarbonization.

 

 

MARKET SEGMENTATION

BY TYPE

• Portland Cement
• Blended Cement
• Others

 

BY GEOGRAPHY

• Germany
• France
• Italy
• U.K
• Rest of Europe

BY END USE

• Residential
• Commercial
• Infrastructure/civil engineering

 

MARKET SIZE AND FORECAST

The European Cement industry (EU 28)  accounted for XX Metric tons/year of cement capacity with production of cement ranging from 176.5 Metric tons/year in 2020 and is further forecasted to reach about xx Mt/year by 2026 at a CAGR of 2.2%.

 

Out of 65 markets that have produced quarterly data for H1 2021, 25 had recorded year-on-year (Y-o-Y) growth in that period, including the most major companies established and manufacturing cement in the EU Nations i.e., Heidelberg Cement, Cemex and Lafarge Holcim Cement.

 

MARKET DYNAMICS

The European cement industry is facing substantial operational and investment costs, due to stricter environmental regulations. Similarly, labour, raw material extraction, and fuel costs are also on the rise. It is expected that European governments will continue to introduce new legislation to curb carbon emissions further.

 

To comply with the new regulations, the European cement industry is expected to continue to upgrade their technologies as well as use alternative fuels, such as biomass, fly ash, blast furnace slag etc.

 

The UK is facing rising operational costs due to reducing carbon dioxide emissions, as the country adopted stringent regulations to reduce carbon dioxide emission by 57% until 2030.

 

Cement is one of the industries which would need to reduce emission further to comply with the government regulations. However, this will require additional investment and would result in high production costs.

 

In Europe, Turkey is the largest country in terms of cement production. Residential construction is increasing on the back of government projects of affordable housing schemes. At the same time, infrastructure spending is also expanding.

 

Under Turkey’s Vision 2023, the government planned to build 70,000 km of roads network and 20,000 km of the railway network. There are other various government projects under private-public partnerships including bridges, airports, tunnels, railway stations, etc.

 

Moreover, energy projects and healthcare projects are also underway. Overall, the Turkish demand for cement is expected to remain elevated during the forthcoming years.

 

 

RECENT PARTNERSHIP

The Carbon Neutral Alliance, founded by CEMEX and its partners, intends to speed the development of breakthrough technologies that will transform CEMEX’s Rudersdorf plant into the world’s first carbon-neutral cement factory.

 

The Carbon Neutral Alliance is a collaboration of over 20 business and public organisations committed to climate change innovation. A waste heat recovery project, as well as the development of renewable energy generation, are among the technologies being introduced at Rudersdorf.

 

In addition, CEMEX plans to create sustainable aviation fuel on-site as a result of its collaboration with Sasol and ENERTRAG. The Carbon Neutral Alliance’s experience and knowledge will be invaluable to CEMEX as it works to decarbonize the cement manufacturing process at its facilities around the world.

 

 

COMPETITIVE LANDSCAPE

The majority of EU cement producers operate on a global level, giving them access to global best practice and technology. Raw materials are extracted mainly onsite, which avoids transportation costs and environmental damage.

 

• Trade – cement is a high-density product with a relatively low selling price. Transport costs are therefore a determinant to trade. The EU exports mainly to the US and imports come mainly from East Asian countries like China, Thailand, and the Philippines.
• EU cement producers own almost 60% of the cement and lime production capacity in the US, and have significant production facilities in the rest of the world.
• Because of the relatively high costs of transport each of the larger national markets in Europe is, in effect, composed of a number of smaller regional markets,

Mexico-based Cemex has announced the suspension of production at all of its plants in Panama and those of its Colombian subsidiary Cemex Latam Holdings from 25 March 2020. It may resume certain activities on or before 13 April 2020.

• Mexico’s companies are most exposed due to a large European presence to the impacts of the coronavirus there. Europe is the second-largest market for Cemex’s products, generating 24% of its revenue in 2019.

 

US-based company GCP Applied Technologies has received a European patent for increasing the efficiency of cement grinding by using sustainable raw materials.

 

Heidelberg Cement has limited the amount of net investments to around €1.2 billion per year. Net investments refer to the balance of investment and divestment in the area of property, plant and equipment.

 

COMPANIES PROFILED

• Aalborg Portland Group
• Cementir Holding
• Cemex
• Denizli Cement
• Dyckerhoff
• HeidelbergCement
• Holcim Ltd
• Irish Cement
• Kunda Nordic Cement Corp
• Lafarge
• Lagan Cement
• Natural Cement
• Tarmac Limited
• TITAN Group
• Valderrivas Portland