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Industrials
The cement industry is paving the way for a robust revival as brokerages predict a significant surge in growth. With strong demand fundamentals and structural changes within the sector, the outlook for 2025 appears optimistic. Let's dive into the key factors driving this trend and what to expect from the global and regional cement markets.
The global cement market is expected to expand from USD 371.1 billion in 2024 to USD 744.34 billion by 2037, with a Compound Annual Growth Rate (CAGR) of about 5.5% during the forecast period from 2025 to 2037[1]. In 2025, the industry is estimated to generate revenue of USD 385.39 billion. This growth is largely driven by increasing infrastructure development worldwide and a focus on sustainable practices to reduce carbon emissions.
Several key factors are contributing to the projected growth of the cement industry:
Infrastructure Development: Global investment in infrastructure is expected to reach about USD 3.3 trillion annually, underlining the long-term demand for cement[1]. Projects like the Cebu-Cordova Link Expressway in the Philippines highlight the industry's critical role in large-scale infrastructure[1].
Decarbonization Efforts: The industry is moving towards sustainable practices, with initiatives like carbon capture technologies and the use of solar heat to manufacture clinkers, which aligns with global sustainability goals[1]. Companies like UltraTech Cement and Buzzi are leading the charge with innovative technologies[1].
Urbanization and Housing Demand: Rapid urbanization in Asia Pacific and Africa is driving construction activities, increasing cement consumption for residential and commercial projects[1]. Governments in countries like India and Nigeria are supporting this growth through housing initiatives and infrastructure investments[1].
The Asia Pacific region is a significant driver of the global cement market. In 2024, the market was valued at USD 206.4 billion and is projected to reach USD 416.24 billion by 2037, with a CAGR of about 5.5% from 2025 to 2037[1]. Countries like India and China are pivotal, with India accounting for over 8% of global installed capacity[1]. China is focusing on decarbonization and sustainable construction practices[1].
India is witnessing considerable growth, driven by rapid urbanization and infrastructure development. Companies like UltraTech Cement are leading with robust volume growth and strategic acquisitions[4]. The government's increased spending on housing and infrastructure will further fuel demand for cement[2].
In Indonesia, the cement industry is focusing on export growth and domestic projects. Despite facing challenges like low capacity utilization, the industry remains optimistic about growing domestic sales by 1-2% in 2025, supported by government initiatives like the Three Million Houses Programme[5].
The cement sector is poised for a robust recovery in 2025, driven by several factors:
Pent-Up Demand and Capex Push: Infrastructure investments and renewed capital expenditure are expected to boost demand significantly[2]. This includes increased government spending on housing and infrastructure projects, as announced by the Finance Minister, Nirmala Sitharaman[2].
Consolidation and Competition: The sector is experiencing consolidation, with larger players like UltraTech Cement and Adani-owned Ambuja Cement dominating the market. This trend is likely to enhance profitability through economies of scale and better pricing strategies[2][4].
Sustainable Practices: The emphasis on decarbonization and environmentally friendly practices will continue to drive innovation, positioning companies for long-term sustainability and regulatory compliance[1][4].
Several brokerages are optimistic about the future of the cement sector. Here are key highlights:
JM Financial forecasts a CAGR of 7-8% for cement demand over FY25E-27E, driven by improved sales realization and higher margins[2].
Crisil expects demand momentum to improve in FY26, driven by infrastructure and rural housing segments, leading to a 7% YoY growth[2].
Nomura notes that while sustaining higher prices remains challenging, the sector is seeing gradual increases in certain regions[2].
Despite the optimistic outlook, the cement sector faces challenges:
Sustainability Pressures: The industry continues to grapple with carbon emissions, necessitating innovation in production processes[1].
Market Competition: The sector is experiencing heightened rivalry between major players, which could impact smaller competitors during consolidation[2].
However, these challenges also present opportunities for growth:
Technological Innovation: Companies embracing green technologies can differentiate themselves and attract sustainable investors[1].
Geographic Expansion: Export markets and strategic domestic projects can offer additional revenue streams[5].
The cement industry is on the cusp of a significant revival, driven by robust demand, infrastructure investments, and a shift towards sustainable practices. As global economies invest more in infrastructure and housing, the sector's growth is expected to be substantial over the next few years. With brokerages predicting strong CAGR growth, the cement industry presents a promising investment opportunity for those looking at long-term prospects.
Innovative technologies and government initiatives are aligning to drive this growth, ensuring that the industry not only expands but does so in a manner that reduces its environmental footprint. As the world moves towards greener manufacturing processes, the cement sector stands ready to adapt and thrive in this new landscape.
