A review of global cement industry trends INSIGHTS FROM THE GLOBAL - PowerPoint PPT Presentation

A review of global cement industry trends INSIGHTS FROM THE GLOBAL CEMENT REPORT, 12 TH EDITION Thomas Armstrong, Managing Editor International Cement Review

Agenda § Review of global cement markets in 2016 § Consumption, trade and capacity trends § Global growth scenarios and outlook to 2018 § Focus on Latin America and key markets § Conclusions

Global cement demand growth is slowing Global cement demand, 2006-2018E 4,500 12% 4,034 4,155 4,056 4,129 4,133 4,100 10% 4,000 3,585 3,746 10% 10% 3,312 3,500 8% 8% 8% 8% 3,000 2,765 2,832 3,000 2,570 6% 6% YoY Change 2,500 4% (Mt) 4% 2,000 3.0% 2% 2% 1.8% 1,500 0.1% 0% 1,000 -0.8% -2% 500 -2.4% - -4% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017F 2018F World % Change Source: The Global Cement Report TM , 12 th Edition § Global cement demand doubled between 2000 and 2010 (CARG 7.3%) § Annual growth peaked at 10 per cent in 2006 § General deceleration since 2010, even contracting in 2015 § CAGR between 2006 and 2016 fell to 4.9 per cent

Regional cement demand growth rates, 2006-2016 Global growth rates, China, RoW, LatAm 20% 17% 16% 15% 13% 11% 11% 11% 10% 10% ( YoY % Change) 7% 7% 7% 7% 6% 6% 5% 5% 5% 4% 4% 4% 5% 3% 3% 3% 3% 2% 2% 2% 1% 1% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E -1% -3% -5% -4% -5% -5% -10% China World (excl. China) Latin America

Regional economic growth trends GDP Growth, world and regions, 2006-2018 12 10 8 YoY GDP growth (%) 6 4 2 - 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -2 -4 -6 World Advanced economies Emerging market and developing economies Emerging and developing Asia Latin America and the Caribbean Sub-Saharan Africa § GDP levels have stabilised since the global financial crisis with emerging Asia leading the way § Latin America dropped into negative territory in 2016, but is expected to recover over coming two years

Evolution of global cement demand Evolution of global cement demand, 1990-2018F 4,500 4,000 3,500 3,000 2,500 (Mt) 2,000 1,500 1,000 500 - Emerging Markets Mature Markets China § China accounted for 58 per cent of global demand in 2016 § Emerging markets represent 35 per cent of demand, ahead of Mature Markets with 7 per cent

Regional cement consumption, 2006 vs 2016 Share of world consumption by region, Share of world consumption by region, 2006 2016 Sub Middle Saharan Sub Saharan East N Africa Middle East N Africa Africa Africa Indian Sub- Indian Sub- N America 3% 5% 3% 5%Cent. 4% N America 2% 3% continent Cent. continent America 3% America 7% 9% 2% 1% S America S America 3% W Europe 3% 3% W Europe C Europe 9% 1% E Europe 4% Australasia C Europe 0% 2% S Asia E Europe 5% 5% Australasia 0% S Asia 5% N Asia N Asia 52% 61%

Top consuming nations, 2016 Top cement consuming nations, 2016 Rank 2016 2016 vs 2014 2395 1 China – 350 288 2 India – 300 3 United States – 250 4 Turkey +2 200 (Mt) 5 Indonesia +2 150 6 Egypt +4 95 100 67 62 59 57 56 56 56 55 50 42 40 35 29 28 27 26 23 7 Brazil -3 50 8 Vietnam +3 - 9 South Korea +4 10 Russia -5 11 Saudi Arabia -3 12 Iran -3 13 Japan -1 14 Mexico – Consumption (Mt) 15 Pakistan +1 16 Thailand -1 17 Germany – § Half of the Top 20 consuming nations are from Asia, 18 Algeria – led by China (2,396Mt) and India (288Mt) 19 Philippines +1 20 Bangladesh +3

Per capita cement consumption in 2016 (Kg) 1,000 1,500 2,000 2,500 3,000 3,500 500 - Qatar Bahrain UAE Luxembourg Macau Lebanon Tunisia Montenegro Iran Egypt Bhutan Kazakhstan Mauritius Reunion Palestine Per capita cement consumption, world (kg) Thailand Iraq Suriname Cement Consumption Per Capita (kg) Belarus Cyprus Cambodia Slovakia Japan Croatia Brazil Bulgaria Mexico Djibouti Sri Lanka Median Estonia Uzbekistan Venezuela Gambia Serbia Spain World Av. Netherlands Sweden Moldova Paraguay Angola Benin Ghana Ukraine Median: 287kg World average: 563kg Swaziland Puerto Rico Nepal Côte d'Ivoire Cuba Nicaragua Zambia Liberia Tanzania Ethiopia Eritrea Chad Congo - Dem. Republic Niger

GCC countries remain the leading consumers of cement Per capita cement consumption, top 25 countries (kg) 3,500 2950 3,000 2,500 1922 2,000 1705 1643 (Kg) 1489 1438 1354 1,500 1111 1095 1050 1001 925 886 1,000 838 831 813 725 715 684 680 653 633 628 625 619 500 - Cement Consumption Median World Av. Per Capita (kg)

Cement consumption vs GDP Cement consumption vs GDP - per capita 1500 1400 1300 1200 1100 Cement consumption per capita (kg) 1000 900 800 700 600 500 400 300 200 100 0 0 10,000 20,000 30,000 40,000 50,000 60,000 GDP per capita (US$)

Worldwide capacity trends – growing surplus Global capacity vs consumption, 2010 Global capacity vs consumption, 2016 7,000 7,000 Utilisation rate: 76% Utilisation rate: 67% 6,000 6,000 5,000 5,000 4,000 4,000 (Mt) (Mt) 3,000 3,000 2,000 2,000 1,000 1,000 - - 2010 2016 Consumption (Mt) Cement Capacity (Mta) Consumption (Mt) Cement Capacity (Mta) § Global capacity reached 6138Mta in 2016 § Consumption growth is lagging capacity growth : consumption increased by 25 per cent between 2010 and 2016, while capacity increased by 40 per cent § The surplus capacity doubled from 1.06bnt in 2010, to 2.00bn tpa § Worldwide utilisation rates, therefore, dropped from 76% in 2010 to 67% in 2016 § World utilisation rates outside of China fell from 70% to 61% (additional 124Mta capacity each annualy between 2010- 2016)

Cement plant database: plants under construction § Source: The Global Cement Report TM database, January 2017

Cement plant database: plants under construction § Xuan Thang Cement’s new 12,500tpd kiln line under construction, Ha Nam, Vietnam – online December 2017

234Mta new capacity new under construction New plant construction, worldwide (excl. China), 2016 80 70 60 50 (Mta) 40 30 20 10 - Africa Indian Sub- South Asia Middle East Europe Americas North Asia Australasia Continent Under construction Announced § 234Mta new capacity now under construction – in line with historical trends § Concentrated in Africa and Asia § 231Mta announced, though not all expected to materialise

Trade in 2016 Leading import nations, 2016 Leading export nations, 2016 2016 Country Country Mt 1 China 18 1 Bangladesh 13 2 Vietnam 18 2 United States 12 3 Iran 15 3 Iraq 6 4 Thailand 13 4 Sri Lanka 5 5 Japan 12 5 Afghanistan 5 6 UAE 12 6 Singapore 5 7 Turkey 11 7 Cambodia 5 8 Spain 10 8 Ghana 5 9 Germany 7 9 Myanmar 5 10 India 6 10 Kuwait 4 Others 78 Others 115 Total 198 Total 179 § 190Mta of cement and clinker traded internationally in 2016, representing 4.6 per cent of consumption § 103 countries engaged in exports – 152 countries engaged in imports § Annual trade volumes stable over the last five years, with Asian countries amongst the main exporters.

Trade: key developments & pricing trends § High exportable surpluses, reduced import demand, resulting in lower prices § Worldwide av. prices fell 8 per cent in 2016 to US$56, versus US$62/t in 2015 § Emerging industries establishing new grinding plants to benefit from lower clinker (West Africa), but seeking to raise barriers to cheap cement imports § Pictured: CIMAF’s 1Mta grinding plant at Tema, Ghana (November 2016) 17

World markets in 2016 – consumption growth (YoY change) Regional growth rates, annual (YoY), 2016 10% 8% 8% 6%6% 6% 4% 4% 2%2%2%2%1%1%1% Change (%) 2% 0% 0% -2% -1% -4% -4% -4% -6% -8% Change (%) >10.0 -8% -10% >5.0 – 10.0 >2.5 – 5.0 East Africa West Africa Indian Sub-continent North Africa North Asia Southern Africa Central America Australasia North America Central Europe Western Europe South Asia Middle East Eastern Europe Central Africa South America >0 – 2.5 0 <0 – -2.5 <-2.5 – -5.0 <-5.0 – -10.0 < -10.0 2016

World markets in 2018 – consumption growth forecast (2 yr CAGR) Regional growth rates, annual (YoY), 2016 & 2018F 10% 8% 6% 4% Change (%) 2% 0% -2% -4% -6% -8% -10% East Africa West Africa Indian Sub-continent North Africa North Asia Southern Africa Central America Australasia North America Central Europe Western Europe South Asia Middle East Eastern Europe Central Africa South America Change (%) >10.0 >5.0 – 10.0 >2.5 – 5.0 >0 – 2.5 0 <0 – -2.5 <-2.5 – -5.0 <-5.0 – -10.0 < -10.0 2016 2018

Consumption growth trends and forecast to 2018 Cement consumption growth trends and forecasts Demand CAGR 2006- (Mt) 2014 2015 2016E 2017F 2018F 16 World 4,155 4,056 4,129 4,133 4,100 % Change 3.0% -2.4% 1.8% 0.1% -0.8% 4.9% China 2,466 2,339 2,395 2,347 2,281 % Change 2.8% -5.2% 2.4% -2.0% -2.8% 7.2% Rest of world 1,689 1,717 1,734 1,786 1,819 % Change 3.4% 1.7% 1.0% 3.0% 1.9% 2.4% Lat Am. 187 185 175 174 176 % Change 1.6% -0.8% -5.2% -0.8% 1.1% 2.6% Source: The Global Cement Report, 12th Edition § World cement demand is slowing as China resets to a lower growth course § Growth outside of China remains within the long term CAGR rage of 2.4%