Russia and CIS cut cement production

25 February 2009

Eurocement is cutting back production

Eurocement is cutting back production

Cement production and consumption is set to contract in Russia and the Commonwealth of Independent States (CIS) during 2009 as the impact of the global financial crisis is felt in the region according to the latest report by market research company PMR.

"We predict that the market will gradually recover in subsequent years however, and in the long term, with the region's immense infrastructure development and housing needs, we predict the region will match the levels seen in more developed countries," said Robert Obetkon of PMR.

According to the report, the average annual increase in the monetary value of cement used in Russia, Ukraine, Kazakhstan, Belarus, Uzbekistan, Azerbaijan, Moldova, Turkmenistan, Georgia and Armenia between 2003 and 2008 was +50%. This increase reflected both a steep rise in cement prices and the large scale of the construction boom in the region.

"In 2008, the total volume of residential construction in the region was almost 100 million m2," said Mr Obetkon, "and Cement consumption reached almost 100 million tonnes, worth in excess of US$ 15 billion (€ 11,7 billion), making Russia and the CIS one of the most cement-hungry regions in the world."

Despite the demand, the 90 cement plants operating in the region reduced production in 2008 to adjust to the slowing demand and the increased quantity of imported cement from countries such as China and Turkey. "This trend is expected to continue in 2009," said Mr Obetkon.

"Despite the fact that several new cement production facilities - with a total annual production capacity of 10 million tonnes - will come on-line during the year, we expect that all of the production facilities in the region will have to adjust their output downwards to take account of the subdued demand.

"Next year, new production facilities with a capacity of more than 20 million tonnes are scheduled to commence operations, so as was the case between 2003 and 2006, we predict that the region will become a net exporter of cement through to 2011," said Mr Obetkon.

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