Cement Prices Explained

Cement prices posted varied trends across different regional markets due to supply and demand dynamics, and price fluctuations of its key ingredients. 

In North America, it steadily increases because of the robust demand from ongoing infrastructure projects and construction activities. Also, fuel prices contributed to higher production costs. High energy costs and a surge in construction activities (due to government initiatives), particularly in the European residential and commercial sectors influence its prices. 

In contrast, the Asian market experiences moderate prices as Chinese demand is tepid due to property sector issues. South America and the Middle East share similar trends as price hikes dominate the markets due to supply chain disruptions and rising fuel costs.

Why are cement prices fluctuating?

1. Supply and Demand Dynamics

Prices usually increase when demand for cement exceeds supply, which usually happens as a result of increasing construction activity or infrastructure projects. This is because producers have to adjust to the increased demand. On the other hand, if supply exceeds demand, producers lower prices to offload excess inventory.

After the pandemic cement prices posted varying prices across top country importers as the recovering construction sector in Europe and North America increased its demand. Conversely, the ailing property sector in China is crowded with cautious buyers and investors due to lower sales and high-interest loan rates.

2. Raw Material Costs

Gypsum, clay, and limestone are among the basic materials used in the manufacturing of cement. Price fluctuations for these resources have a direct effect on manufacturing costs, affecting cement prices.

For example, there has been a significant increase in cement clinker and other raw materials prices, totaling $20 per ton due to the significant shift in its global market value.

Also, coal is utilized to make cement clinkers. Over the previous months, the price of coal has risen by over 50% on the global market due to intensified carbon emission taxes.

3. Energy Costs

Energy-intensive processes like grinding, kiln operations, and quarrying of raw materials are all necessary for the production of cement.

In North America, the high energy costs associated with these operations led to increased production expenses which are passed on to consumers. This reflected a $102 per metric ton of cement in the U.S. market. Similarly, Germany experienced prices of around $50 per metric ton in the same period due to increasing energy costs in Europe.

Energy costs and manufacturing inefficiencies because of aging machinery translated to $149 per metric ton of cement in Asia. These regional price fluctuations highlight the direct correlation between energy-intensive operations and cement prices.

4. Market Competition

Market competition among cement manufacturers influences global prices.

In regions with competition like North America and Europe, manufacturers often engage in price wars to capture market share, leading to lower prices for consumers. For example, Cemex and Lafarge Holcim (both U.S. companies) are known to adjust their pricing strategies in response to competitors, resulting in more competitive cement value.

However, in Asia and the Middle East, cement prices are higher due to the lack of price pressure. Major players like China National Building Material Group dominate the market, allowing them to maintain higher prices.

5. Eco-friendly Alternatives

Concrete is the second most consumed substance in the world (with about 10 billion tons produced yearly), next to the water.

Also, it’s the most widely used material for construction, from bridges to large buildings. With the current condition of the global climate, there’s a pressing need for green evolution.

Eco-friendly cement alternatives like plastic waste, ashcrete, blast furnace slag, and micro silica are increasingly challenging traditional cement products in the construction industry. These sustainable materials significantly reduce carbon emissions and utilize industrial by-products, making them more environmentally friendly.

Which variables impact the price of cement?

• Supply and Demand Dynamics
• Raw Materials Costs
• Energy Costs
• Market Competition
• Eco-friendly Alternatives

Where does cement come from?

The main raw materials used in the manufacturing of cement are limestone, clay, shale, and gypsum. The production process involves mixing certain raw ingredients in specific portions and then heating them to high temperatures in a kiln to produce clinker.

1. Limestone – Calcium is one of the essential elements in cement and is mostly found in limestone. Usually, quarries and mines are where it is extracted.

2. Clay or Shale – The required iron, aluminum, and silicon are found in shale and clay. These materials are also taken out of mines or quarries.

3. Gypsum – Gypsum is added to regulate the cement’s setting time. Natural deposits are where it is usually mined from.

Following the collection of these raw materials, they are crushed and processed into a fine powder. After that, the powdered mixture is heated to high temperatures (up to 1450°C or 2642°F) in a kiln, causing chemical reactions that result in the production of clinker. The finished cement is made by cooling the clinker and grinding it into a fine powder.

Typically, the processing of raw materials and strict quality control throughout the manufacturing process of cement are in specialized cement plants.

What are the uses of cement?

Cement is a material that may be used in a variety of industries and applications due to its versatility. Cement is used primarily for the following purposes:

1. Construction – Buildings, bridges, roads, dams, and other infrastructure projects all require a lot of cement, which is a vital component in the construction industry. It is used by binding together aggregates like sand and gravel to form concrete, which is one of the most extensively used construction materials worldwide.

2. Masonry Work – In masonry work, cement is used to bond bricks, blocks, and stones. Cement, sand, and water are the main ingredients of mortar, which is used for plastering, bricklaying, and other masonry applications.

3. Stabilization and Reinforcement – Soil stabilization with cement helps make it stronger and more resilient, especially for building projects when the soil conditions are poor. Additionally, it is employed in the construction of underground structures, retaining walls, and construction of foundations.

4. Preparation of Building Materials – Precast concrete elements, pipelines, tiles, concrete blocks, and other various building materials are all made with cement. Because of their strength, durability, and versatility, these materials are widely utilized in construction.

5. Decorative Applications – To create stamped concrete, decorative concrete finishes, and architectural elements like columns, cornices, and balustrades, cement-based materials are frequently utilized for decorative purposes.

6. Repair and Maintenance – To maintain and repair already existing structures, cement-based materials are utilized. Examples of these tasks include patching concrete holes and fractures, repairing damaged concrete surfaces, and restoring historic buildings and monuments.

7. Industrial Applications – Among the many industrial uses for cement is the production of cement-based products including concrete pipes, roofing tiles, and cement board. In addition, it is also used in the mining industry for backfilling mine shafts and tunnels, and in the oil and gas industry for well cementing.

What is the future price of cement?

The cement market largely relies on the construction industry and the economic performance of its top country buyers.

While recession has receded in most countries, some high-economic countries reported a slowdown in consecutive years, putting their construction industry uncertain as this sector is tied to a country’s economic performance. Also, the mobilization of sustainable practices slowly challenges cement prices as this commodity’s production contributes to the warming of the global climate.

On the demand side, the cement industry found a diverse market from developing Asian and Middle Eastern countries (and still from developed countries).

In the U.S., Canada, and European countries, the demand for cement will rise due to large-scale infrastructure projects, urbanization, and the adoption of advanced construction practices such as 3D concrete printing. Also, they focus on sustainable construction, leading to the adoption of eco-friendly cement alternatives.

For example, Denmark pioneered in developing green concrete using waste materials from power plants and mining. French Lafarge and SEQENS companies partnered to construct buildings using 100% recycled concrete. Additionally, Seratech and EcoMaterial Technologies promote the use of plastic waste-based concrete and low-carbon concrete solutions.

These innovations not only help in reducing the environmental impact but also promote sustainable development in the construction sector.

India, Vietnam, and the Middle East countries’ demand for cement is projected to grow even faster due to rapid urbanization and infrastructure development. Also, these regions face pressure to adopt sustainable practices, but the transition to eco-friendly alternatives is slower due to cost constraints and lack of technology.

Overall, the cement market is forecasted to reach 5.96 billion tons by 2030. This growth represents a compound annual growth rate (CAGR) of 5.24% during the forecast period from 2024 to 2030. As a result, the expected price for cement will be $173.50 per ton in 2030.