Soyuzcement Assessed Effectiveness of State Support Measures for Industry and Economy

Soyuzcement’s preliminary assessment of the cement industry in 2020 indicates the production and consumption of cement in Russia has significantly decreased, but the catastrophic consequences of the COVID-19 pandemic were largely avoided. The program of comprehensive state support for the economy, announced by the President, played a key role in supporting the industrial sector: anti-crisis measures for essential industrial enterprises, social initiatives and financial support mechanisms such as preferential mortgage rates and financing of the “Housing and Urban Environment” national project.

The increase in the accessibility of civil and business loans had a beneficial effect on the entire construction industry. Instead of the planned market growth in April, consumption fell by 17.9 % compared to last year, and according to Q2 results showed a decline of 11.7 %. A negative scenario with a drop in production volumes by the end of the year of more than 10 % was expected.

“The program of preferential mortgage rates of 6.5 % per annum, which started in April, made it possible not only to support citizens who decided to improve their living conditions, but also the construction sector, producers of building materials, logistics companies, and the market labor force. While maintaining the their capacity utilization, cement enterprises continued to pay federal taxes and other regional budgets contributions, which is also a statement on the effectiveness of the anti-crisis measures,” said Dmitry Sapronov, executive director of Soyuzcement.

Thanks to anti-crisis measures, the cement production volumes began to slowly recover by May, and by the end of the construction season the industry reached monthly volumes similar to last year. The preliminary decrease in production volumes in 2020 can be estimated at 4 % compared to last year, a 6 pct improvement from the initial estimate. However, all federal districts of the country suffered to varying degrees: for example, in the Volga Federal District, the drop was 1 % YoY, in the Central — 6 % YoY, and in the South — 8 %.

Worth noting that apart from the global pandemic in 2020, the cement industry has been going through a difficult period for a number of years: between 2015 and 2018, cement consumption decreased by over 25 %, and only in 2019 the market showed some growth. All in all, capacity utilization in the country stands at about 50 %.

Earlier in December, Deputy Prime Minister of Russia Marat Khusnullin stressed the importance of further lowering the mortgage rate down to 4-5 % to achieve higher housing construction output. He also called the preferential mortgage program one of the most effective measures.

Cement enterprises continue implementing a set of anti-crisis measures, while maintaining a significant level of CapEx: they modernize production facilities, increase energy efficiency, ensure compliance with modern environmental standards, and develop new products and services. Russian manufacturers are ready to supply materials of the highest quality and fully meet the needs of the construction industry and the goals set in the National Projects programme.

Soyuzcement brings together the leading cement organizations of the Eurasian Economic Union: cement producers, engineering enterprises, R&D institutes, IT and analytical centers. The organization unites 50 cement plants, the production volume of which accounts for 80 % of the market of the EAEU.