Cement and additives demands on the rise

News Freedonia Group Inc. July 05, 2006
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The global demand for cement is forecast to grow 4.7% annually through 2010 to 2.8 billion metric tons, valued at over $200 billion. China, which is already by far the largest market for cement in the world, will register the largest increases. Product demand in the country is projected to expand more than the total amount of cement currently used annually in the next to largest markets-India and the U.S.-combined. These and other trends are presented in the study World Cement, conducted by the Freedonia Group Inc., a Cleveland-based industry research firm.

Other developing parts of Asia and Eastern Europe, as well as a number of nations in the Africa, Mideast and Latin America regions, will also record above average cement market gains, fueled by a robust construction outlook. Product demand in India, for example, will climb at a healthy 6.4% annual rate. Vietnam, Thailand, Turkey and Indonesia will register some of the strongest increases in percentage terms. Market advances will be less robust in the developed areas of the U.S., Japan and Western Europe, with maintenance and repair construction accounting for much of the growth in cement demand through 2010. However, a pickup in construction activity in Germany and Japan following an extended period of decline will help bolster overall developed world market gains.

Demand for straight portland cement-which currently accounts for more than three-quarters of all cement sales worldwide-will be healthy, spurred by increases in global construction spending and further advances in manufacturing technology. Sales of blended cements will climb at a somewhat faster pace through 2010, driven by their superior performance in selected applications. The demand for non-blended pozzolanic cements, masonry cement and other types will record the strongest gains.

Ready-mix concrete is expected to be the fastest growing market through 2010, surpassing consumer sales to become the largest single cement market. Ready-mix concrete companies account for a comparatively small but rising share of total cement demand in a number of fast-growing developing countries, and suppliers will benefit from an extremely favorable outlook in China, where large-scale construction projects will require significant amounts of ready-mix concrete. Consumer demand for cement will also expand at an above-average rate, stimulated by higher personal income levels in developing areas, where consumer sales can account for half or more of all cement demand, and by new product introductions in mature developed world markets.

Another study by the Freedonia Group, Cement and Concrete Additives, found that the U.S. demand for cement and concrete additives is forecast to advance 6.2% per year to $2.3 billion in 2010, outpacing concrete demand and overall construction expenditures. Among the factors fueling gains will be a rebound in the nonresidential construction market, as well as healthy increases in highway and street spending. Additionally, greater acceptance of mineral additives such as fly ash and blast furnace slag will drive demand for these products as partial substitutions for portland cement. Gains will also benefit from a shift toward higher-value formulations in additives such as water reducers, accelerators and air entrainers.

Chemical additives will remain the largest product segment, comprising half of the total market in value terms. Gains will be led by strong demand for water reducers, especially high-range superplasticizer types, which are key components of self-consolidating concrete. Additionally, the rise of better-performing polycarboxylate superplasticizers will expand the range of applications for water reducers in concrete.

Demand for additives will grow nearly 7% per year through 2010, with virtually all products posting above-average gains. Fly ash and blast furnace slag will be driven by steel and specialty fibers such as cellulose and alkali-resistant glass, which benefit from superior reinforcement and shrinkage control properties. While gains for synthetic fibers will be sub par, good opportunities exist for specialty products such as polypropylene/steel blends, polypropylene blends and synthetic marcrofibers.

Highways and streets and nonresidential buildings were the two largest markets for cement and concrete additives in 2005, each controlling about a third of the total demand. Fueled by strong increases in nonresidential building construction, additives for nonresidential concrete will rebound considerably, rising from the slowest-growing market during the 2000-2005 period to the fastest growing from 2005 to 2010. Highway and street applications will benefit from the passage of SAFETEA-LU, which provides nearly $300 billion in federal funding for highways and streets through 2010.

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