Cement producers in the country are set to experience a sales boom over the next three years due to the construction of plants, industrial parks, and general infrastructure. The cement industry is expected to be one of the main beneficiaries of nearshoring, according to analysts from Ve por Más. “This effect could continue for at least the next three years, gradually stabilizing, as it would not only boost infrastructure or the construction of industrial plants but also, in the medium term, a surge in residential construction. This effect is more noticeable in the northern part of the country,” said Elisa Alejandra Vargas, an analyst at the brokerage firm.
“We anticipate a positive quarter for the sector, as even though cement volumes continue to show year-on-year declines, the general increase in prices would be offsetting this issue,” she added. For example, Cemex expects that cement volumes in some regions will continue to decline, but this would be offset in all regions by price increases, with sales growing by 12.0% year-on-year. Regarding the U.S. market, the analyst noted that for the third quarter Cemex is expected to report a drop in volumes due to weakness in the residential sector. Price increases would help to mitigate the impact on volumes, however, the increase would be modest at approximately 1.2 percent. Meanwhile, the EBITDA margin would be around 17 percent.
For Mexico, weak bagged cement volumes offset by bulk and the nearshoring effect, continue to drive projects in the northern part of the country. The price increase would be moderate. “We expect an EBITDA of 320 million dollars with a margin of 29.0 percent,” she indicated.
As for Grupo Cementos Chihuahua (GCC), the analyst said they expect a positive financial report for the third quarter of the year, with a 10.2% year-on-year increase in sales due to lower fuel costs and boosted by a favorable pricing scenario in both Mexico and the United States.
In Mexico, an increase in concrete volume is expected, while cement would grow at a moderate pace year-on-year, thanks to ongoing maquiladora plant projects in the north of the country due to the nearshoring effect. For the U.S. market, the analyst mentioned that due to weather conditions and economic slowdown, there would be an impact on cement volumes, which would be offset by the increase in prices. Concrete volumes would remain stable with a slight increase in prices.
