13 JUNE 2017

Koen Coppenholle, Chief Executive, CEMBUREAU

CEMENT AND CONCRETE MARKETS

GLOBAL OUTLOOK

MAGFORUM 2017, KRAKOW

Today: 29 Members (27 full Members and

2 Associate Members)

Full Members = national cement

industry associations and cement

companies of the European Union

(with the exception of Malta and

Slovakia) plus Norway, Switzerland

and Turkey

Croatia and Serbia are Associate

Members of CEMBUREAU

Cooperation agreement with

Vassiliko Cement (Cyprus)

CEMBUREAU THE EUROPEAN CEMENT ASSOCIATION

N

PL

CH

S FIN

UK

IRL

E P I

F

B L

NL D

GR TR

A

CZ

RO H

EST

DK LV

SI HR

BG

LT

RS

CY

A LOCAL INDUSTRY

THE CEMENT SECTOR

Capital intensive / long investment cycles

CO2 intensive in manufacturing

CO2 low and energy efficient in application

limestone clinker cement

Decarbonation

70% of

emissions

(process)

+ fuel emissions to heat kiln

cement

(10%-15%)

water

(15%-20%)

aggregates

(65%-75%)

+ + = =

concrete sustainable

construction

TACKLING TOMORROW’S CHALLENGES

INFRASTRUCTURE

USD 3.3 trillion annual

investment needed

URBANIZATION

55% of citizens globally

live in urban areas;

66% by 2050

(adding 2.5 bn,

mainly in Asia/Africa)

CONCRETE

IS ESSENTIAL

- LOW CARBON

PRODUCT

- ENERGY EFFICIENT

- CO2 EFFICIENT

- DURABLE

- SAFE & RESILIENT

CLINKER & CEMENT

PRODUCTION

AT START OF INNOVATIVE

SUPPLY CHAIN

- Alternative fuel use

- Novel cements

- Clinker substitution

- Breakthrough CCU

THE ENVIRONMENT IN WHICH WE OPERATE

• Geopolitical instability: Arab countries; Ukraine; EU (Brexit; Future of Europe);

Paris Agreement ?

• Consolidation? Yes, but… top 7 share in global capacity has remained almost

unchanged + new entrants in Middle East, Africa, South East Asia

• Cyclical recovery has stalled at 2%/yr (from 7%/yr 2008-2013) / global capacity

rates at 70%

• China cement consumption slowing down

WORLD CEMENT PRODUCTION

China [VALUE]%

Japan [VALUE]%

India 5.9%

Asia (excl. China, India, Japan) P

[VALUE]%

Africa P [VALUE]%

USA [VALUE]%

America (excl. USA) P

[VALUE]%

Oceania P [VALUE]%

CIS P [VALUE]%

CEMBUREAU [VALUE]%

Europe (excl.

CEMBUREAU) E [VALUE]%

WORLD CEMENT PRODUCTION 2015

BY REGION AND MAIN COUNTRIES % • Global cement production:

4.6 bn tonnes

• Construction markets grow

EU 28 + 1.7%(2016); + 2.7% (2017)

US : +1.1% (2016); 4.6% (2017)

• Cement consumption recovers Euroconstruct data: + 1% (2016); + 2.4% (2017); + 3.5% (2018)

• 47 Mt exports; 20.5 Mt imports (2015)

SHORT TERM MACRO ECONOMIC DATA REAL GDP 2008 Q4 =100 - 2016Q4

92

94

96

98

100

102

104

106

108

110

112

114

200

8Q

4

200

9Q

1

200

9Q

2

200

9Q

3

200

9Q

4

201

0Q

1

201

0Q

2

201

0Q

3

201

0Q

4

201

1Q

1

201

1Q

2

201

1Q

3

201

1Q

4

201

2Q

1

201

2Q

2

201

2Q

3

201

2Q

4

201

3Q

1

201

3Q

2

201

3Q

3

201

3Q

4

201

4Q

1

201

4Q

2

201

4Q

3

201

4Q

4

201

5Q

1

201

5Q

2

201

5Q

3

201

5Q

4

201

6Q

1

201

6Q

2

201

6Q

3

201

6Q

4

EU28 France Germany

Italy Spain UK

Source: Eurostat / Cembureau

EU28: INDICES - INDUSTRIAL PRODUCTION,

CONSTRUCTION PRODUCTION, CEMENT MANUFACTURING

50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0

20

06Q

1

20

06Q

2

20

06Q

3

200

6Q

4

20

07Q

1

20

07Q

2

20

07Q

3

20

07Q

4

20

08Q

1

20

08Q

2

20

08Q

3

20

08Q

4

20

09Q

1

20

09Q

2

20

09Q

3

20

09Q

4

20

10Q

1

20

10Q

2

201

0Q

3

20

10Q

4

20

11Q

1

20

11Q

2

20

11Q

3

20

11Q

4

20

12Q

1

20

12Q

2

20

12Q

3

20

12Q

4

20

13Q

1

20

13Q

2

20

13Q

3

20

13Q

4

20

14Q

1

20

14Q

2

20

14Q

3

20

14Q

4

20

15Q

1

20

15Q

2

20

15Q

3

20

15Q

4

20

16Q

1

20

16Q

2

20

16Q

3

20

16Q

4

Industrial Production Index

Construction Production Index

Cement Manufacturing Production Index

Capacity top cement producers worldwide 2016

ASIA LEADING THE PACK…

Lafarge Holcim

HeidelbergCement

CEMEX

UltraTech Cement

(India)

Votorantim

(Brazil)

BuzziUnicem

(Italy)

EuroCement

(Russia)

CRH

(Ireland)

DangoteCement

(Nigeria)

InterCement

(Brazil)

Source: Statista

Lafarge Holcim

HeidelbergCement

CEMEX

Italcementi

EuroCement

(Russia)

Votorantim

(Brazil)

Cement manufacturers based on market share worldwide (2015)

Anhui Conch

China Resources

Taiwan Cement

Source: Statista

CONSOLIDATION IN CHINESE CEMENT MARKET

The Chinese Cement association has asked to speed up consolidation of the

local cement industry to the Ministry

• Consolidate 10% of country’s cement capacity in 10 producers by 2020

• Supply – demand balance would require 390 Mt/yr cut in production capacity

and 130,000 jobs in the next 5 years

• Existing producers will pool USD 3 bn in Restructuring Fund

Source: Global Cement, 28 September 2016

MODERATE CEMENT CONSUMPTION GROWTH IN

EUROPE

CEMENT CONSUMPTION GROWTH

EASTERN EUROPE 2004-2019 CEMENT CONSUMPTION GROWTH

WESTERN EUROPE 2004-2019

... COMPARED TO EMERGING MARKETS

CEMENT CONSUMPTION GROWTH

CHINA 2004-2013

CEMENT CONSUMPTION GROWTH

INDIA 2009-2017

EU 28: RATIO OF CONSTRUCTION INVESTMENTS

IN % OF GDP 2006 - 2015

12 12.2

12

11.1

10.5 10.4 10.1

9.8 9.8 9.7

6 5.9 5.7

5.2 5 4.9

4.7 4.5 4.6 4.6

6 6.3 6.3

5.9 5.5 5.6 5.5

5.2 5.2 5.1

0

2

4

6

8

10

12

14

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Construction Residential Dwellings Other Building and structures

CEMENT INTENSITY OF THE CONSTRUCTION

SECTOR

CEMENT DEMAND FORECAST 2017

ROBUST GROWTH

NEGATIVE

GROWTH

MODEST GROWTH

NO GROWTH

NO GROWTH

STRONG

GROWTH

NEGATIVE

GROWTH

STRONG

GROWTH

INFLUENCING FACTORS

Recent

market

drops but

volatile

Net growth

MdwT

We’re in for

volatile trading

(OPEC + shale

gas demand-

supply)

Demand

from

India/China

Firm price

level in most

grades

FREIGHT CRUDE OIL

PETCOKE

CEMPROSPECTS CONFERENCE

ALTERNATIVE FUEL USE

Thermal Energy consumption by fuel type Breakdown of alternative fuels 2014

Follow us on Twitter! @CEMBUREAU

www.cembureau.eu