Russia: Cement and the construction sector

Russian cement producers have significantly increased their production output this year, along with the growth of the construction market. At the same time, prices are creeping up: according to analysts, this is an objective trend, since the cost of cement has not yet won back the rapid increase in the production of other building materials.

The indicators of the cement market this year give grounds for some optimism among its participants. The cement production index in January-July 2021 increased compared to last year by 4.1% to 32.4 million tons, according to the Soyuzcement survey. The volume of traffic by rail in January-August 2021 amounted to 18 623 thousand tons, which is 7.8% higher than the indicator for the same period last year. According to the forecast of the Ministry of Economic Development, production of non-metallic mineral products, including cement, is expected to grow by 3.2% in 2021. The growth of the cement market by the end of the year may exceed 5%, analysts say.

This growth is stimulated by the significant revitalization of the construction industry. The indicator of housing commissioning after a pandemic fall of 5.9% in 2020 increased immediately by 30.1% this year. Consumption of cement in January-July reached 32.8 million tons, an increase of 4.9% from 2020. “In the medium and long term, positive factors for the industry will be the anti-crisis measures of the government of the Russian Federation and regional authorities, support packages for the economy, backbone enterprises and the population, as well as renovation of housing stock, implementation of integrated development projects, an increase in the share of construction of cement concrete roads, implementation of a “Housing and urban environment” national project, the implementation of social initiatives of Russian President Vladimir Putin,” hoped analysts.

Meanwhile, the dynamics of the cost of cement is still lagging behind the general trends in the building materials market. According to the analytical materials of "CM PRO", producer prices (excluding VAT and delivery) in August 2021 compared to July 2021 increased by 1.5% and amounted to 4,098 rubles / ton. Meanwhile, purchase prices (including VAT and delivery) decreased during this time by 1.9% and amounted to 5,324 rubles / ton. Since the beginning of the year, producer prices have increased by 11.1%, purchase prices - by 10.6%, reported analysts.

Experts expect further price increases in line with market trends. Andrey Bashkatov, Executive Director of the Russian division of Xella International, told Kommersant earlier: “In my opinion, cement prices have not yet won back the price increases that have occurred in large similar industries. For example, glass has risen in price by about 50%, metal has also risen in price quite significantly, and the price for cement has risen by only 10%, and it is disproportionate, therefore there is an expectation that cement will rise in price more."

The construction sector has always been the engine for the entire economy of the country. Given the current realities, it would seem that now is the time for state protectionism. However, it is obvious that there is no point in hoping for compensation for the cost of transportation or subsidizing interest rates for domestic companies - such measures are not even discussed due to the increased burden on the budget.

In accordance with the information of Novaya Gazeta

Region: Russia
Source: en.jcement.ru
Tags: building
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The use of materials published on the site is allowed only with reference to the source (the journal «Cement and its application») and a hyperlink to the quoted material.
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