2009 cement production to fall in Russia and CIS

Cement volumes in Russia and the former Soviet states will fall in 2009 as the impact of the global financial crisis hits the region hard according to a report by market research company PMR. Nevertheless, 10 million tons of new capacity is expected to come on-line throughout the year.

{reg} "We predict that the market will gradually recover in subsequent years however, and in the long term, with the region's immense infrastructure development and housing needs, we predict the region will match the levels seen in more developed countries," said Robert Obetkon of PMR.

The average annual increase in the monetary value of cement used in Russia, Ukraine, Kazakhstan, Belarus, Uzbekistan, Azerbaijan, Moldova, Turkmenistan, Georgia and Armenia between 2003 and 2008 was over 50%. This increase represented a rise in cement prices as well as a construction boom in the region.

"In 2008, the total volume of residential construction in the region was almost 100 million m2," said Mr Obetkon, "and Cement consumption reached almost 100 million tons, worth in excess of $15 billion, making Russia and the CIS one of the most cement-hungry regions in the world."

The 90 cement plants operating in the region cut output in 2008 on slowing demand and the increased imports from China and Turkey. "This trend is expected to continue in 2009," said Mr Obetkon.

"Despite the fact that several new cement production facilities - with a total annual production capacity of 10 million tons - will come on-line during the year, we expect that all of the production facilities in the region will have to adjust their output downwards to take account of the subdued demand," the report said.

"Next year, new production facilities with a capacity of more than 20 million tons are scheduled to commence operations, so as was the case between 2003 and 2006, we predict that the region will become a net exporter of cement through to 2011," said Mr Obetkon to Construction Europe.