After an unstable first half for the Brazilian economy marked by high interest rates, high debt and family defaults, cement sales accumulated a 1.8% drop compared to the same period of 2022 with the sale of 30.3 million tons in the first six months of the year.
The month of June reached 5.3 million tons of sales, registering a growth of 1.3% if compared to the same month of the previous year, according to the National Union of the Cement Industry - SNIC. When analyzing the dispatch of cement per working day in June of 228.4 thousand tons, there is an increase of 1.4% over June of last year and a decrease of 1.6% compared to the first half of 2022.
The main drivers of cement consumption, real estate construction and infrastructure, slowed down in the period due to the difficulty in accessing credit, amid high interest rates, a reduction in launches, real estate financing operations and income at the level of the period before the pandemic .
Among the sectors of the economy surveyed by the Getúlio Vargas Foundation (FGV) - industry, services, commerce and construction¹ - the latter's confidence was the only one to fall in June, due to the perception of weak demand in the coming months. However, this pessimistic bias did not extend to all areas of construction, influenced by the new rules of the Minha Casa, Minha Vida (MCMV) program announced by the Board of Trustees of the Fundo de Garantia do Tempo de Serviço (CCFGTS), which increase the subsidy for housing units, the value of financed property and lower interest rates for low-income families, boosting residential construction.
There was also an improvement in industry2 and consumer3 confidence that advanced in June, reaching the highest level since February 2019. The results were motivated by the easing of inflation and the expectation of a drop in interest rates.
However, it is still too early to confirm optimism given the situation of high household debt, low level of work inventories and weak demand.
The interest rate continues to hinder access to credit, being responsible for the decrease in sales of real estate units, which further compromises the performance of the cement industry.
With so many uncertainties, the sector remains attentive to the possible reduction of the Selic rate as of August, the approval of the fiscal framework and the tax reform – essential to equalize the tax burden and promote the reindustrialization that is so necessary for the country's growth.
“Brazil's economy is starting to show signs of recovery with the expectation of growth in the Gross Domestic Product (GDP), control of inflation and improvement in labor market indicators. Even so, the Brazilian cement industry remains cautious in its performance assessment, pointing to stable sales in 2023 compared to the previous year” Paulo Camillo Penna – President of SNIC
OUTLOOK
The sector expects an improvement in the coming months, driven by works in the recent real estate cycle, with reinforcement of the Minha Casa, Minha Vida Program and the resumption of halted works and infrastructure. The federal government's announcement of expanding the subsidy and reducing the interest rates of the MCMV brings encouragement to the sector and should boost investments in civil construction in the country.
In this sense, the use of concrete walls has been gaining prominence in the construction of housing developments, due to their speed and competitiveness. The construction system has been increasingly used due to the quality and speed of execution, as it is three times more agile than the conventional system, allowing it to be used as a solution in projects with tight deadlines and high repeatability, in addition to integrating thermal comfort and acoustic to the work.
There is still an effective apprehension of the market with the recent alterations of the Basic Sanitation Framework. The Demographic Census released by the IBGE indicated that the Brazilian population increased by 6.5% (to 203 million) between 2010 and 2022, while the number of households grew by 34% (to 91 million) in the period. This movement makes it more difficult to meet the goals of universalizing basic sanitation, but the cement industry is ready to supply the approximately 5 million tons of input needed to achieve this goal.
8th BRAZILIAN CEMENT CONGRESS
The second half of 2023 also marks the return of the most important event in the cement and construction value chains. The 8th Brazilian Cement Congress (CBCi) will take place between the 6th and 8th of November in the city of São Paulo.
The meeting will bring together authorities, business leaders, members of academia and national and international experts to discuss topics that go beyond technological innovation in the production and application of cement to structural reforms, legislation and environmental aspects such as the circularity of waste and the reduction and neutralization of CO2 emission.
With the objective of contributing to the development of the construction sector – and, consequently, of Brazil – the 8th CBCi intends to further encourage the search for new products and solutions that stimulate innovation, productivity and the cement business.
