There are about 50 large manufacturers in Russia, which if necessary, they can annually produce 101 million tons of cement. In 2021, the production volume amounted to 60.1 million tons (an increase of more than 7% compared to 2020). Soyuzcement Executive Director Daria Martynkina explains that in times of crisis, production volumes in the cement industry always drop sharply. And the decline, given the duration of construction cycles, stretches for years. For statistics 2021 the coronavirus recession has also affected.
In the forecast of NO "Soyuzcement" provided by "Novye Izvestia", it is reported that in the construction industry in 2022 growth of 5% was expected, the growth of the cement market was predicted at the level of 4%.
Now cement producers are reversing their forecasts and confidently talking about negative dynamics. “According to the pessimistic scenario, the reduction by the end of the year may reach 7%”, - the document says.
The forecasts of the leaders of the cement industry are directly related to the statements of the Ministry of Economy of the Russian Federation (forecasts a decline in GDP by 7.8%) and the Ministry of Construction (confirms a decrease in the volume of housing commissioning).
Earlier, the Ministry of Construction did not rule out that 90 million square meters of housing could be built in the country in 2022. “Now the regulators have a clear understanding that there will be stagnation. The Ministry of Construction declares that the volume of housing commissioning will decrease to 72 million square meters by 2024. This is the level at which cement consumption can roll back to the levels of 2005”, - explained Yevgeny Vysotsky, executive director of SMPRO, an expert on the building materials market.
Vysotsky believes that with this vector, starting from 2022, the fall in demand for cement could range from 5.5% to 13%.
And it's very tangible. According to the most approximate estimates of market players, Russian cement plants, with a drop in demand, for example, by 9% in 2022, will receive a total loss of about 35 billion rubles of income (at a price including VAT and delivery) and about 25 billion, if we consider losses only taking into account prices from manufacturers (average price - 4.5 thousand rubles per ton).
Evgeny Vysotsky adds that the demand for cement has already begun to decline. “We analyze the dynamics of cement shipment to railway transport for decades - every 10 days. And for 8-9 decades in a row, that is, almost 3 months, there has been a decrease compared to the same period last year. The fall reached 18%. Let's see how the summer months will show themselves - the hot construction season. If we do not see a sharp increase already in June, then it will be an achievement to fit into the predicted decline”, - Yevgeny Vysotsky summed up.
Gennady Rasskazov, First Vice President of Sibirsky Cement, said that producers are trying to keep down selling prices, but the cost of cement in 2022 will increase by 30%.
“Under the sanctions, we will spend 66% more funds on repairs and maintenance of equipment than a year earlier. Coal went up by 76-86%, diesel fuel - by 30%, oils and lubricants - by 83%, transport and logistics costs increased by 14-24%. In addition, the wage fund has been increased by 30%”, - the Soyuzcement press service quotes Rasskazov. At the same time, the price from manufacturers has so far risen by 8-9%.
As RBC reported, referring to a copy of the draft strategy developed by the Ministry of Construction, by 2024 it is expected to reduce the volume of commissioned housing. According to the pessimistic scenario, it will decrease to 72 million sq. m. m, that is, by 22% compared to 2021. The most noticeable decline is expected in the construction of apartment buildings. Accordingly, with a slowdown in the pace of construction, a decrease in demand for cement becomes expected, justified and long-term.
The government is now strenuously trying to stimulate the housing market with preferential mortgage programs, but in the first quarter there is a catastrophic decline. Novye Izvestia reported that in April the sale of apartments in new buildings decreased by 50%. The Russian Guild of Realtors (RGR) notes that mortgage lending simply stopped in April.
“The total number of loans in April fell by 74.2%, the amount of loans issued fell by 70.7%. We did not observe such a collapse either during the covid crisis or during the crisis of 2014-2015”, - Yevgeny Suvorov, an economist at Centrocredit Bank, quotes Finam. With the Central Bank lowering the key rate to 11%, mortgages are expected to start recovering from the end of May.