"Cement in Peru: challenges and opportunities in a transforming market"

The cement sector in Peru faces a mixed scenario, marked by challenges and opportunities in a context where private investment has decreased significantly. Although public works growth has increased by 26.3% between January and July of this year, the cement market has shown signs of stagnation. According to Guido Valdivia, director of the Peruvian Chamber of Construction (Capeco), this sector has gone almost a year and a half without seeing significant growth, raising questions about its immediate future. During the first half of 2024, national cement shipments have shown stabilization, although they remain below the levels reached in 2021 and 2022. With shipment figures ranging between 900,000 and 1,020,000 tons, the numbers reported by the Association of Cement Producers (Asocem) indicate a 4% decline compared to the previous year. This trend suggests that the sector is facing a recovery that is still not robust. Historically, the last months of the year present a rebound in cement shipments, which could mean relief for the sector. However, Valdivia warns that although the contraction in consumption was less severe in August, any growth expected could be more of a rebound effect after the poor performance of the second half of 2023 rather than a sustainable recovery. Thus, the construction GDP could reach a growth of between 3.7% and 4%, although this figure would be insufficient to offset the 8% decline from last year. A relevant aspect of cement demand in Peru is self-construction, which represents 71% of urban housing, reaching up to 90% in peripheral areas. This translates into a significant dependency on cement for these types of projects, which, although less visible, are fundamentally important for the country’s housing development. Additionally, real estate projects and public works, although to a lesser extent, also play an essential role in cement consumption. The Peruvian cement market is dominated by three major companies: Pacasmayo, UNACEM, and Yura, which together represent around 90% of the total. However, there has recently been an entry of new competitors such as Cemento Inca and the Mexican company Cemex, which are looking to gain ground in a market that, by its nature, is territorialized and presents significant barriers to entry. Valdivia points out that the distribution structure and operational plants of established players are an advantage in a sector where cement cannot be transported over long distances. Among the new acquisitions, Holcim has entered the Peruvian market after acquiring Comacsa and Mixercon, intending to diversify its offerings in the sector. Norberto Ledea, CEO of Holcim Peru, mentions that the company's strategy will be based on balanced growth between cement, aggregates, and construction solutions. Their goal is to increase revenue by 50% over the first five years, which would represent an increase of $40 million compared to current figures. Pacasmayo, a company with a strong presence in the north, has adapted to market changes through a digitalization process that optimizes its marketing chain. Aldo Bertoli, the company's central commercial manager, emphasizes the importance of customer experience in a competitive environment that demands constant innovation. On the other hand, UNACEM has focused its efforts on the quality of its products and sustainability, which has allowed it to maintain its position in the sector. Gabriel Barrio, the company’s commercial manager, highlights that having an effective distribution network is essential, and their strategy includes diversification tailored to the needs of the local market. Holcim's entry into the market represents a challenge for established companies, as the firm has a distribution network that could facilitate its positioning in the sector. Ledea mentions that through Disensa, their franchise network, they hope to maximize their reach in the Peruvian market, a strategic step in a fiercely competitive environment. The current situation of the cement market in Peru reflects the economic and construction dynamics of the country. As progress is made towards a possible stabilization, collaboration among the various actors in the sector will be key to enhancing recovery and facing the challenges that still persist. The coming months will be crucial in determining whether the sector can consolidate a trend of sustainable growth or, on the contrary, face new contractions that could affect its long-term development.