Ex-works cement prices recover in China and India while European markets remain depressed in 3Q2020

Gray cement ex-works prices are expected to recover in the third quarter of 2020, except in Western Europe, Mediterranean Basin and Asia-Pacific ex-China, according to the 3Q2020 update of CW Research's Global Cement Trade Price Report.

After a declining trend on account of the pandemic's debilitating impact on global economic growth and trade in the first half of the year, several markets witnessed quarterly increases in ex-works prices for gray cement.

"In the Asia-Pacific-Japan region, we see prices going up while production declined during the second quarter of 2020. In India, despite the economy suffering its worst 2nd quarter GDP contraction on record, cement prices not only remained firm, but strengthened. An inverse dynamic is at play with prices increasing within India sub-regions but especially in South India as production catches up with sustained project demand especially driven by rural demand as well as tier 2 and tier 3 cities ", states Carolina Pereira, CW Group's Manager, Advisory & Research.

India's cement prices continue to be pushed by rural demand

Despite the lockdown adopted by the government to contain the spread of the Covid-19 in the third quarter of the year, cement ex-works prices in India are expected to witness an almost 2 percent increase quarter-on-quarter. Ex-works prices at the national level are expected to increase both on a yearly and quarterly basis, reaching around USD 75 per ton in the third quarter of 2020.

While rural demand has helped offset the decline in sales in urban areas, cost savings, better-than-expected realizations and higher prices are keeping Indian cement manufacturers on track. With further relaxation of lockdown measures, public spending is expected to increase, driving demand up with a new round of fiscal stimulus measures expected at the end of October.

In Pakistan, the construction sector is expected to expand, as the government has given top priority to the development of the industry. Pakistani ex-works cement prices are predicted to increase more than 2 percent quarter-on-quarter in 3Q 2020.

Economic recovery in China and Brazil to boost cement prices

A better than expected economic recovery is projected to drive ex-works cement prices higher in China in the third quarter of the year. Following a GDP growth of 3.2 percent year-on-year in the second quarter, and as demand improves, quarter-on-quarter ex-works prices are projected to increase more than 3 percent during the third quarter.

Prices are also increasing in Brazil, where the construction sector continues to show signs of recovery following a slowdown in the beginning of the year. Following an upward curve that started in May, cement sales in the country increased more than 7 percent in the first eight months of the year. The ex-works price is likely to increase by more than 10 percent year-on-year and around 3 percent quarter-on-quarter in the third quarter, driven by self-construction and by the resumption of construction works in the real state sector.

Germany and France's ex-works prices keep on a downward trend

Ex-works price in Germany is predicted to witness the biggest decline of Western Europe in the third quarter of 2020, by almost 6 percent, to reach an estimated USD 73 per ton. France is also expected to see more than 1 percent decrease year-on-year in prices.

German construction sector activities are witnessing a downward trend, declining by 4.3 percent year-on-year, emerging as the sector most affected by the lockdown. In France, the second quarter of the year was also slow for construction, as home sales declined 47 percent year-on-year in the period due to the containment measures. 

The Global Cement Trade Price Report (GCTPR) is CW Research's benchmark price assessment for monthly gray cement, white cement, clinker and granulated blast furnace slag prices and volumes. The 150+ page report, published on a quarterly basis, serves as the industry go-to source for monthly price data for over 70 individual markets worldwide, including multiple cornerstone data series: import, export, ex-works and market prices.

Find out more about the report here.