The rapid rise in production costs in the cement industry, combined with rising interest rates and inflation, added to the global geopolitical instability environment, have significantly contributed to the sector's low sales performance.
Faced with this unstable environment, the cement industry sees significant readjustments in its inputs such as refractories, gypsum, sacks, sea and road freight and petroleum coke - item with the highest participation in the cost of cement production - which reached a 37% increase, only in the first quarter of the year.
The dimension of the impact of the cost of coke on the industry can be evaluated when we see that from 2020 to the first quarter of 2022 its price increased by 485%!
This entire environment was crucial for cement sales to register a retraction of 2.2% in the first three months of the year, compared to the same period in 2021. In nominal terms, 14.9 million tons were sold in the quarter, according to with the National Cement Industry Union (SNIC).
In the comparison by working day (the best indicator that considers the number of days worked and which has a strong influence on cement consumption), sales of the product registered 230.3 thousand tons in March, an increase of 2.1% compared to February and 4.4% compared to the same period in 2021. Even so, the quarterly result showed a decrease of 3.1% compared to the first three months of 2021.
The sector's performance was not worse in March due to housing market demand. However, the performance of launches tends not to be sustained at these levels, since the increase in the stock of properties, the drop in sales and high interest rates should inhibit future developments. Self-construction, an important driver of cement consumption, continues to slow down due to the high level of unemployment, the lower income of the population - recorded the lowest value since 2012 - and the growing indebtedness of families, which reached 51.9%, the highest value of the entire historical series started in 2005. A reflection of this situation are the successive drops in retail sales of construction material since mid-2021.
“The skyrocketing costs of cement inputs, combined with a strong instability in the political and economic scenario, do not allow us to predict a good performance like those seen in the last 3 years. The industry’s ambition in 2022 is to maintain the sector’s sustainability in the face of a terribly pressured environment.” Paulo Camillo Penna – President of SNIC
