SOLID DEMAND:

Local cement consumption grew by 15.76% in 2012 and continued rising in the first half of 2013, at monthly rates of 3-24%. Dante Carhuavilca, chief of economic and social studies at the National Society of Industries, told OBG, “Cement production will continue to be propelled by growing demand, in infrastructure, roads, public works in general, malls and housing for all social classes.”

Cement output for 2012 totalled 9.8m tonnes, including 200,000 tonnes in exports mainly to Bolivia, Chile and Ecuador, according to the Association of Cement Producers. In the first six months of 2013, some 5.89m tonnes were produced, with more than 108,000 tonnes being exported, marking year-on-year increases of 11.24% and 42.81%, respectively. Cement producers are working at almost full installed capacity, with roughly 11.4m tonnes recorded in 2012.

In October 2012 Cementos Lima, the largest producer, acquired 100% of Cemento Andino and formed the Unión Andina de Cementos (UNACEM), increasing its capital from PEN1.18bn ($444.3m) to PEN1.64bn ($617.6m), as per company figures. This merger helped UNACEM secure a 53% market share, expanding annual installed capacity to 7.6m tonnes.

Remaining local producers include Cementos Pacasmayo, Cementos Yura, Cementos Selva and Cementos Sur, the last two of which together produce less than 700,000 tonnes. Each major producer is positioned to provide the needs of specific regions and UNACEM will now control most of the central distribution, including Lima.

UNACEM’s Condorcocha plant added a new oven to the production line, bringing annual installed capacity to 1.96m tonnes, a 55% rise. Its Atocongo plant also underwent modernisation to help boost annual installed capacity to roughly 5.5m tonnes.

Cementos Pacasmayo’s expansion at Rioja will lift capacity by some 240,000 tonnes, and is due to be finished by year-end 2013, bringing installed capacity to more than 3m tonnes, thus making it the second-largest producer. The firm is also planning to build a 1.6m-tonne plant in the city of Piura, costing $300m and expected to be operational in 2015.

Foreign global giant CEMEX (Mexico), which has been making inroads into the market since 2007 with imports of its Quisqueya brand, is planning a local plant. Herles Loayza Casimiro, head of statistics at the Peruvian Chamber of Construction, believes this foreign presence has helped maintain stable market prices. The large number of quarries has also helped keep prices stable. Pacasmayo estimates its reserves could last up to 68 years. Consumption of cement will continue to expand in line with construction activity, led by infrastructure projects and efforts to address the housing deficit.

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The Report: Peru 2014

Construction & Real Estate chapter from The Report: Peru 2014

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