28.01.2025 17:34

CEMROS expert announces the beginning of cement market recession in Russia

Experts note a slowdown in the construction industry in Russia. In particular, cement consumption in December decreased by 24 % compared to the data for November last year. Denis Usoltsev, Manager of Marketing and Strategic Analysis Department of CEMROS, explained the reasons for this slowdown.

According to the data, the overall consumption growth of construction materials for the year 2024 amounted to 3%. However, Denis Usoltsev warns that this figure may mislead many people.

“Almost all of the growth came in the first half of 2024 and is provided by the reserve of previous years, gained high rates of construction after the active launch of new projects by developers in 2020-2023. Given the cancellation of the preferential mortgage program in July and the increase in the key rate of the Central Bank of the Russian Federation in October 2024, the consumption decline reached 21% and became progressive, and this trend is only increasing,” he explained.

Increased production costs have added to the industry challenges. In July last year, gas prices increased by 11.2%, electricity prices by 9%, and tariffs for rail freight transportation increased by 13.8% as of December 1, 2024.

According to Usoltsev, it can be stated that the cement market is entering recession. He also noted that throughout last year, cement demand was supported by the need to supply current construction projects. In particular, according to the data of the Unified Information System of Housing Construction DOM.RF, in December the volume of housing under construction in Russia amounted to 119.1 million square meters, which is 13.1 million square meters, or 12.4% higher than in December 2023.

“It should be understood that new projects were introduced systematically, their impact on consumption is subdued in time. In these conditions, we do not expect a sharp decline in demand, as the main construction works on the projects launched in 2021-2023 are completed, the most likely scenario is a progressive reduction in cement purchases, and if the crisis scenario is realized, cement consumption may decrease by 25% year-on-year,” the expert added.

Region: Russia
Source: CEMROS
Image source: CEMROS
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