Cement firms expand capacity to meet rising global demand

MANILA, Philippines - The combined production capacity of local cement makers can sufficiently meet the rising demand of the domestic market.

A study by Prof. Antoinette Rosete of University of Santo Tomas using published sources showed a steady forecasted increase in cement plant capacity expansion. This will meet the increased domestic demand for cement over a four-year period covering 2014-2017.

CeMAP president Ernesto M. Ordoñez pointed out that the cement industry operated at 69 percent of capacity last year, meaning there is still enough room for heightened production to match expected growth in cement demand in the coming years.

“The combined increased capacity of the cement firms in the Philippines is more than sufficient to meet rising demand,” Ordoñez said. “Imported cement is not necessary, especially if this exposes us to the risk of getting substandard cement which poses danger to life and safety.  This cannot be easily addressed because the cement supply source is outside the country,” he added.      

Last year, cement manufacturers in the country enjoyed a 5.9 percent growth in their sales performance.

Rosete forecast that local demand for cement may continue to go up over the next four years, reaching 27 million metric tons.

The optimism shared by CeMAP members about projected upticks in Philippine demand for cement and other construction materials was triggered by increased government spending for infrastructure projects, notably owing to the massive rehabilitation program in the aftermath of the Yolanda devastation in the Visayas.

Government allocation for infrastructure was set at P296.7 billion.  Other factors cited for the cement sector’s bullish forecast were the roll-out of construction projects under the private-public sector partnership, the rehabilitation of areas badly damaged by Typhoon Yolanda, and the killer earthquake that hit Bohol Island.

This study also indicated proportionate growth in combined cement plant capacity which will match the growing market demand. This capacity growth is forecasted to reach more than 38 mmt in 2017. This means that there will be adequate domestic supply of cement since the forecast of 27 mmt of cement demand will be using only 71 percent of cement plant capacity.

Cement companies with expansion plans on the drawing board are CEMEX Philippines Group of Companies, Eagle Cement, Holcim Philippines, Inc., Lafarge Associated Companies, Northern Cement Corp., Pacific Cement Corp., San Miguel Corp. and Taiheiyo Cement Philippines, Inc.

“While the industry faces the incertitude of power supply in some areas of the country, the cement firms have addressed any intermittent brownouts by already having installed stand-by power generators,” Ordoñez said.