Cement Demand Cools Down as Federal Projects Conclude

Mexico’s major cement producers expect modest growth in 2024 due to the conclusion of some of the government’s flagship infrastructure projects, along with infrastructure budget reductions. Under this scenario, some players are looking for alternative markets in Europe, while others prepare for expansion projects in Mexico. 

The Mexican cement market is primarily dominated by CEMEX, Grupo Cementos Chihuahua, Holcim, Cementos Fortaleza, Cementos Cruz Azul, and Cementos Moctezuma, who are also members of the National Cement Chamber (CANACEM). Recent years have seen these companies, along with other key players in the construction sector, benefit from President  López Obrador’s major infrastructure projects, including the Mayan Train, the Interoceanic Corridor (CIIT), and the Felipe Ángeles International Airport (AIFA).

In 2023, general construction activity in Mexico surged by 15.6%, largely propelled by 78% growth in civil works, pushing the GDP of the Mexican construction industry to MX$1.6 trillion (US$94 billion), a level not seen since 1993, reports BBVA Mexico. 

Despite the positive momentum, the completion of several large projects and anticipated budget cuts have tempered expectations for the remainder of 2024. Carlos Serrano, Chief Economist, BBVA Mexico, anticipates significant reductions in construction GDP, as funds are redirected away from these flagship projects.

CANACEM forecasts a modest 2% increase in cement consumption in 2024, reaching 46.4Mt, up from 45.5Mt in 2023, driven by nearshoring trends and the final stages of ongoing infrastructure projects, BNAmericas noted. 

Cement producers are navigating this landscape with individual strategies. While CEMEX has shifted its focus to Europe, other players like Holcim are actively investing in expansion. Holcim announced a US$55 million investment to expand its Macuspana plant in Tabasco and acquired two concrete plants in Queretaro.

The industry is also eyeing opportunities in the construction of railroads. Yanina Navarro, former General Director, CANACEM, highlighted the potential advantages of utilizing trains for transporting cement, citing their ability to carry double the load of trucks while consuming half the gasoline on longer routes.