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Production and Investment Analysis of the South African Cement Industry
Frost & Sullivan, Dec 2009, Pages: 105
This production and investment analysis research service provides an analysis of the South African cement industry over the period 2000 to 2015. The base year for this report is 2008 and the forecast period is from 2009 to 2015. The research service provides a succinct analysis of industry fundamentals that drive growth and influence strategic planning and investment with the cement industry in South Africa.
This Frost & Sullivan research service titled Production and Investment Analysis of the South African Cement Industry provides a detailed analysis of the production and investment trends in the South African cement industry over the period 2000 to 2015. In this research, Frost & Sullivan's expert analysts thoroughly examine the cement demand in the following markets segments: mining, civil construction, independent blenders, concrete product manufacturers, ready-mix producers, and building construction.
Market Overview
Increased Infrastructural Spending and Low-cost Housing Initiatives by the Government to Drive the South African Cement Market
The highly competitive South African cement market has witnessed enhanced quality control and safety implementation over the past few years and is set to experience significant growth. Capital investment on water effluent treatment, reduction of greenhouse gas emissions and dust, and kilns and milling plants upgrade are expected to increase until 2015, driven by the global trend to produce environment-friendly and sustainable products and reduce energy consumption. Increased infrastructural spending by the government, numerous planned projects by public corporations, intended government expenditure on low-cost housing, and the revival of residential building construction are factors that are likely to spur the demand for cement.
“The residential building construction sector is the largest consumer of cement in South Africa, accounting for approximately 50.0 per cent of total cement each year,” says the analyst of this research. “The development of low-cost housing over the period 2009 to 2015 is expected to be the single largest demand driver for the cement industry in South Africa.” The government plans to deliver an estimated 630,000 housing units per annum between 2010 and 2015, assuring cement suppliers a high and steady demand for cement.
The rising energy costs are a major challenge for South African cement manufacturers. Energy costs are estimated to account for approximately 35.0 per cent of the total costs of producing cement. Hence, the operating margins of cement producers are gradually under more pressure, with the cost of diesel, coal, and electricity intensifying. “The cost of energy is likely to remain a key challenge for cement producers over the period 2009 to 2015 due to the planned electricity tariff hikes by the state power producer – Eskom, and the spiralling cost and demand for steam coal, as the global economy recovers from the downturn,” explains the analyst. The use of alternative fuels and waste fuels such as used tire chips, used motor oil, non-recyclable plastics, and other waste materials is a viable alternative to counter the negative impact of the mounting electricity and coal prices. Cement manufacturers should work closely with the government and environmental authorities to expedite approval and use of these alternative sources of energy.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Mining
- Civil construction
- Independent blenders
- Concrete product manufacturers
- Ready-mix producers
- Building construction
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