There is over a billion tons of excess cement production capacity in the world.
In 2024, cement prices are expected to vary across regions. Europe and the US are expected to maintain high price levels.
For the first time in its history, the world cement industry is on the path to net zero carbon emission production technology.
Cooperation between independent cement companies is crucial. Instead of following in the footsteps of large companies, the harmonization provided by the World Cement Association in terms of information exchange and long-term goals stands out as an important alternative.
Ali Emir Adıgüzel
Founding Board Member of the World Cement Association
Who is the World Cement Association and who are its members? In what ways is it different from other associations like the GCCA?
The World Cement Association (WCA) is the largest international organization of independent cement producers. The WCA is a London-based non-profit organization founded in 2016. It has offices in Beijing and Dubai. The current president of the WCA is also the CEO of CNBM, the world’s largest cement company.
The WCA is the first and only voice of the independent cement industry in the world. Our goal is to bring all cement producers together with equal rights, regardless of size, nationality or group.
The production capacity of WCA members is over one billion tons. Unlike other similar organizations, the WCA is not dominated by a few Western multinational corporations, and all corporate members have the same voting rights. Members include cement producers, suppliers serving the cement industry, and service providers such as ClimateTech companies. Board members include representatives from China, France, Ireland, Saudi Arabia, South Africa, Tanzania, Tanzania, Turkey and the United Kingdom.
What are the priorities and activities of the World Cement Association?
Our priority is to be the voice of independent cement producers, to provide members with practical assistance in improving their sustainability and operational performance, and to facilitate and promote the decarbonization of the cement industry. The main activities of the World Cement Association include:
First of all, to organize international conferences where Turkish producers can make their voices heard as in other countries of the world. The WCA organizes annual conferences in Dubai, London, Paris, Shanghai, Istanbul and Nanjing. The topics of these conferences include important issues such as “Increasing Profitability in Times of Global Crises” and “Combating Climate Change”.
One of the main activities of the World Cement Association is to present International Achievement Awards to companies that have shown outstanding success in their fields. However, it should be noted that although there are many outstanding companies and individuals in the Turkish cement industry, the number of participation and applications from Turkey is unfortunately very limited.
One of the most important activities of the World Cement Association is the launch of the industry’s largest job and specialized recruitment network, www.worldcementnetwork.com. This provides the opportunity to communicate directly with the world’s cement producers and exchange information.
“Benchmarking”, which is among the activities of the World Cement Association, provides the opportunity to compare companies with other cement companies on certain metrics. Studies on energy and emissions are being conducted. Common issues and challenges such as maintenance, efficiency and Industry 4.0 are addressed and worldwide comparisons are made on automation, ID and other fan power consumption, high pressure drop, high O2 level in main furnace gas, high energy consumption.
While global multinational cement groups can access large funds for expensive carbon capture projects, independent companies cannot. This is likely to force many small companies to quit the industry. It is necessary to recognize and understand the true meaning of all these differences and to emphasize the importance of cooperation within the World Cement Association (WCA). Information exchange and alignment with long-term goals will be an important step.
What will be the future of the world cement industry?
Global cement demand is generally expected to stagnate for the next 5-10 years. For instanc, indicators in the On Field® research suggest that global cement market demand will be stagnant during the period 2024-2030. Increases are projected only in the Americas, the Middle East, India and Africa. Turkey, China and Europe are forecasted to be the weakest cement markets. The world’s top cement markets are projected to be sub-Saharan Africa (+77% growth forecast to 2030) and India (+42% growth forecast) and North America (+20%).
The reality is that there is over a billion tons of excess cement production capacity in the world, and cement prices are trending downward in all emerging markets (except in Europe) due to falling demand and intense competition resulting from oversupply.
Are regional dynamics in cement markets influential in the cement prices? For example, why are prices not falling in Europe?
Yes, there is a remarkable increase in profit margins in Europe. The good news is that despite lower global and domestic demand, the European cement industry has been able to sustain significant gross margin expansion, maintaining discipline at high cement prices, thanks to fuel costs, which rose sharply during Covid 19 but then declined significantly.
As you know, in the post-Covid-19 period, the cement industry has faced a significant increase in production costs, with double-digit increases in fuel, electricity and international transportation costs. There was also a rapid rise in CO2 costs for volumes above the free allocation, which inevitably had an upward impact on cement prices. In 2023, there was a significant decline in energy prices, especially in coal and petro-coke costs. However, these declines and the recent reduction in CO2 prices (from 80 to around EUR 55/ton) do not seem to have had an impact on cement prices, especially in Europe.
What are the expectations for 2024 for developed and emerging cement markets?
In 2024, cement prices are expected to vary across regions. Europe and the US are expected to maintain high price levels. This stability reflects the ongoing effects of factors such as supply chain disruptions, rising production costs, bureaucratic barriers to imports and industry discipline. On the other hand, a significant decline in cement prices is expected in developing country markets where free market rules and intense competition prevail. This creates a stronger incentive to increase market share – at the cost of losing profit margins – and encourages more intense price wars.
Are advances in carbon capture, utilization and storage technology a turning point in the history of the world cement industry?
Yes, it could be a turning point. For the first time in its history, the world cement industry is on the path to net zero carbon emission production technology. But realistically, CC technology is not developing as fast as expected worldwide and CC solutions need significant development to be scalable and viable. At the current level of technology, the investment required for carbon capture and storage is more than the cost of building a large cement plant. (See Heidelberg’s recent announcement that it is investing €450 million in its very old Antoing cement plant to capture carbon emissions).
Major European cement producers are clearly demonstrating the industry’s strategic commitment to sustainability and environmental responsibility with the decision to invest in mega cement plants with large-scale carbon capture and storage units. However, it is important to note that this investment also has significant cost implications. It should be recognized that carbon capture plants generally have much higher costs than the construction of modern cement plants.
The adoption of carbon capture (CC) technology can be a promising step forward, but as still being in its development stage, it faces significant challenges such as scalability and very high cost. Despite advances in CC technology, the global availability of these technologies is extremely limited due to high costs and the need to prove scalability. Therefore, there are only a few large multinational corporations that can invest in this technology. The focus of international funds on these large companies may in the future lead to the extinction of independent, small-scale cement producers who do not have this opportunity.
Many independent cement producers, while following the Western giants, may lose sight of where their priorities differ and where they have advantages. Moreover, the question of where to store captured CO2 poses a major challenge on a global scale. There is no clear viable solution to this issue yet, as an incredible amount of suitable storage space needs to be identified and developed. So, while there are many uncertainties, there is no doubt that the costs associated with implementing carbon capture technology will, ultimately, be returned to consumers in the form of several times higher cement prices.
Independent Turkish and European cement producers face significant challenges when large multinational competitors turn to carbon capture technology. Unlike these large giant industries, independent producers often do not have the financial resources to set up large-scale CC units. They risk investing in expensive CC technology to remain competitive, or failing to meet evolving environmental standards and thus being unable to compete in foreign markets or even closing down. Especially for independent producers operating older cement plants, the financial burden of implementing CC technology seems almost impossible to meet.
Ultimately, the aim of the big western cement groups is to restrict cement exports to Europe through bureaucratic barriers and to eliminate competition from existing small European producers by pushing those who cannot use carbon capture out of the market. These facilities may lack the efficiency and infrastructure necessary for the successful integration of CC units and may be in danger of closure. Such closures could not only affect businesses but also have wider implications for cement supply in Europe and the US. The closure of older cement plants operated by independent producers could exacerbate the current supply situation in the market. When the capacity of these plants is taken out of the equation, it is possible that the overall supply of cement will decline. This reduced supply could trigger increased competition among the remaining producers and lead to higher prices for consumers. Furthermore, job losses and reduced economic activity associated with facility closures can have wider repercussions in the communities where these facilities are located. For all these reasons, finding solutions that support independent producers to transition to sustainable practices, while maintaining their presence within the industry, is critical to ensure the continued stability of the cement market.
As a result, new CO2 regulations in markets like Europe could practically destroy local cement clinker production. European consumers may soon face cement prices in excess of €250 per ton. In this case, we would need to see massive cement imports, but this path could be made impossible by new taxes. An existing roadmap has been developed to reach this point. Accordingly, cement exports to Europe will be possible until 2030, after which it is unclear.
Our priority is to be the voice of independent cement producers, to provide members with practical assistance in improving their sustainability and operational performance, and to facilitate and promote the decarbonization of the cement industry.
Does the world cement industry have a commitment to sustainability?
Yes, of course it has. The World Cement Association is adamant to the global cement industry’s commitment to sustainability, promoting innovation, environmentally friendly practices and collaboration to reduce environmental impact and secure a greener future. Investments in high-cost carbon capture projects demonstrate the industry’s proactive approach to addressing climate change concerns and transitioning to more sustainable practices.
What are the export markets for Turkey outside Europe?
According to On Field® research, the top cement markets in the world will be Sub-Saharan Africa (77% growth forecast to 2030), India (42% growth forecast) and North America (20%).
The total global seaborne import demand for cement and clinker is estimated to be around 140 million tons. Today, a significant amount of cement is exported from Turkey to the US. The cost of bulk transportation to the US is not expensive due to low freight rates. The US is expected to import 30-40 million tons of cement in the coming years.
In Europe, unless local cement producers take protective measures to reduce the risk of unlimited imports, the supply of cement at competitive prices from China, Vietnam, Algeria, Egypt, Tunisia and Turkey to Europe will increase significantly.
Today, several independent cement exporters aim to continue to offer low-cost green cement to the market by acquiring strategic cement import terminals in target ports and working closely with local cement consumers and independent cement companies to permanently establish themselves in the European and US markets.
In 2024, the global cement capacity surplus could easily reach 1 billion tons, which means that almost 1/3 of the world’s cement capacity will remain untouched. At this point, international cement trade could be a solution to reduce the global surplus.
We see that multinational cement companies such as Holcim and Heidelberg have recently quitted the cement sector and entered into more eco-friendly fields, is there a change of leadership in the world cement sector in this case?
Western European multinationals such as these are expected to increasingly quit emerging cement markets such as India, Africa, Turkey and China. This shift presents opportunities for regional and local players to become industry leaders, while at the same time allowing independent players to expand their market presence with innovative technologies and alternative business models.
Fast-growing companies such as Dangote, Vicat, Adani, Oyak, Votorantim, Vissai, CNBM, Conch, Martin Marietta, TCC will continue to stand out as new industry leaders with alternative business models and strategic investments in the cement industry. In the evolving cement world, I believe they will focus on strengthening their own leadership positions rather than following in the footsteps of the big players. The priorities and strategies of Western multinational cement companies differ significantly from those of regional and local leaders in developing country markets. This difference is reflected in actions such as quitting from highpotential cement markets, channeling investments to non-cement businesses in developed countries, and moving towards software applications, digitalization and green products in developed country markets.
While global multinational cement groups can access large funds for expensive carbon capture projects, independent companies cannot. This is likely to force many small companies to quit the industry. It is necessary to recognize and understand the true meaning of all these differences and to emphasize the importance of cooperation within the World Cement Association (WCA). Information exchange and alignment with long-term goals will be an important step.
There are significant differences in access to international funding and priorities between leading European cement companies and those in developing regions. For this reason, many independent cement groups recognize the value of joining the World Cement Association. Established to address the real agendas of independent cement producers, developing country market producers, the WCA is the largest network in the industry and offers cooperation on long-term goals.
How would you summarize your warnings for the future of the world cement industry?
The global cement industry stands at a critical juncture, with several environmental trends and key developments that will shape the course of the coming years.
First, for the first time, cement production can be a net zero industry. Large multinational companies are receiving billions of dollars in funding and investment to build extremely expensive carbon capture units. This demonstrates the cement industry’s clear and firm commitment to environmentalism.
Second, it is crucial for independent cement producers to recognize the reality that the agendas of western multinational cement groups and their own priorities and agendas as local or regional cement leaders are very different.
Third, the world cement industry has a huge overcapacity of over 1 billion tons! There is enough production capacity for at least the next twenty years.
In particular, while the European cement industry has increased profit margins sustained by higher prices and lower fuel costs, challenges remain in developing country markets where cut throat free market dynamics prevail and sustainable practices and alternatives are underutilized.
In summary, cooperation between independent cement companies is crucial. Instead of following in the footsteps of large companies, the harmonization provided by the World Cement Association in terms of information exchange and long-term goals stands out as an important alternative.
For the first time, cement production can be a net-zero industry. Large multinational companies are receiving and investing billions of dollars in funding to install extremely expensive carbon capture units. This demonstrates the cement industry’s clear and firm commitment to environmentalism.
Could you introduce yourself?
We would like to familiarize with you better. I graduated from Boğaziçi University with a degree in Finance and Harvard Business School with a specialization in Business Administration. For more than 30 years I have been serving in the heavy construction materials industry such as cement and concrete. In this sector, I have particular expertise in international trade, sales and supply of raw materials and have led medium and large industrial enterprises in this field. My professional network includes global business partners in 61 countries, through which I provide companies with international business development opportunities through successful overseas merger and acquisitions. I also specialize in the management of international business disputes and have acted as a mediator in the resolution of complex civil litigation, with experience in international arbitration in Singapore, the UK and France. I am an MMS/ICF certified transformational management coach for senior executives worldwide and I continue to guide many executives in this field.
The positions I served, in order: • Chairman of ACG International Turkey
• CEO of Heidelberg Materials Trade Germany
• CEO of Heidelberg Materials Mediterranean and Middle East Germany
• President of World Cement Association London, UK
• Akçansa Board Member, Turkey • Chief Executive Officer of Hanson Israel
• Chief Executive Officer of Heidelberg Materials Spain
• Board Member of PT Indocement Indonesia
• Chairman of Executive Board of Central Anatolia Exporters’ Association
• Board Member of CBR Ciments Belgium Executive
• Consultant Expert Member of Cembureau Belgium
• Vice General Manager of Çanakkale Cement Industry
