12:18 17.09.2020

Ukrcement links prospects of sector with construction of cement concrete roads

4 min read
Ukrcement links prospects of sector with construction of cement concrete roads

The Big Construction program and plans to increase the share of cement concrete roads in Ukraine give reason to hope for the growth of the cement industry, Director of the Ukrcement cement producers association Roman Skilsky has said.

"The main reason for optimism is the Big Construction program... This will mean a noticeable increase in demand for cement, which will allow domestic companies to increase the number of idle reserve capacities," he said in an interview with Interfax-Ukraine.

Skilsky said that early August, the Shulgin State Road Research Institute, together with Ukrainian Automobile Roads Agency of Ukraine (Ukravtodor), presented a concept and program for the construction of cement concrete roads in Ukraine, which envisage an increase in the number of such roads from 1% to 5% in the next five years. According to him, the process of approval of these documents by the relevant central executive authorities is underway.

At the same time, he said that in the Czech Republic the share of such roads is 22%, and in Germany – 42%.

The head of Ukrcement also counts on the positive impact of the law on the supply of construction products in the market on the industry. The document was adopted by the Verkhovna Rada on September 2 within the framework of European integration, which implements the provisions of Regulation (EU) No 305/2011 of the Council of Europe regarding construction products. Skilsky said that the industry harmonized national and European standards three years ago, but was forced to wait for this law. The document also introduces new rules in the field of public market supervision, which will significantly complicate the falsification of cement products.

In addition, the head of the association pins hopes on the investigation of the import of Portland cement and clinker cement from Turkey to Ukraine, launched early September by the Interdepartmental Commission on International Trade. According to him, this import increased 9-fold in 2019 and 13-fold in January-August 2020 versus January-August 2019, and by the end of the year it may exceed 1 million tonnes.

The head of Ukrcement explained such an increase in imports by a sharp reduction in Turkey's domestic market, a strong weakening of the lira against the backdrop of a strong hryvnia and simple maritime logistics, and added that the Turkish cement industry is ten times larger than the Ukrainian one.

"The market in Ukraine is not growing, it has been fluctuating between 9.2-9.5 million tonnes for the third year in a row, so this deformation means worsening conditions for Ukrainian producers, and these are four large industrial groups, two of which are international," Skilsky said.

He said that Ukrainian producers will be able to easily replace this volume of imports, and the replacement of Portland cement and clinker imported from Russia, Belarus and Moldova after the introduction of anti-dumping duties on the import of Portland cement and clinker from these countries last year is evidence of this.

"The cement industry can increase production further, the capacity reserve is sufficient for at least 20% growth. The question is whether there is a market for such growth," the head of Ukrcement said.

He said that at the beginning of 2020 there was hope for a 20% growth that the construction market showed in 2019. However, the pandemic has made negative adjustments, and in the first seven months of this year, the decline in construction was already 4.6%, including in the housing construction sector – by 22%, and there is only a slight increase in infrastructure construction, Skilsky said.

According to the State Statistics Service, the production of Portland cement in January-July 2020 in Ukraine increased 3.7%, to 5.04 million tonnes, and clinker grew by 1.5%, to 3.9 million tonnes, including in July 2020 compared with July 2019, the growth was 5.9% and 12.2%, respectively.

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