Mexico's cement boom cooling as flagship infra projects approach conclusion

Mexico's leading cement producers continue to enjoy high levels of production, thanks to the ongoing construction of the government's flagship infrastructure projects, but they still forecast modest growth this year as some of those initiatives are coming to an end and infrastructure budget cuts are on the way.

The Mexican cement market is dominated by a handful of companies: Cemex, Grupo Cementos Chihuahua, Holcim, Cementos Fortaleza, Cementos Cruz Azul and Cementos Moctezuma, which are the sole members of national cement chamber Canacem.

These companies, as well as other key players in the construction industry, have reaped the benefits of works on President Andrés Manuel López Obrador’s big infrastructure projects over the last few years, including the Maya train, the interoceanic corridor and Felipe Ángeles international airport (AIFA), among others.

Figures from BBVA México bank show that general construction activity increased 15.6% in 2023, driven by 78% growth in civil works, taking the GDP of the Mexican construction industry to 1.6tn pesos (US$94bn), a level not seen in the country since 1993.

However, the conclusion of various big projects and corresponding budget cuts in infrastructure this year have undermined the bright expectations generated during the first two months of the year, leading to moderate forecasts for the full year.

“Going forward, we expect significant reductions in construction GDP, as the same amount of funds will not be channeled to these emblematic projects,” BBVA México’s chief economist, Carlos Serrano, was quoted as saying by broadcaster 88.9 Noticias.

The situation is likely to drag cement producers down the same path. In February, Canacem agreed with the general outlook and forecast a modest 2% increase in cement consumption in 2024, rising to 46.4Mt from 45.5Mt last year, fueled by the nearshoring trend and the final stages of the flagship infrastructure projects. 

“Government-funded works have been very important during this presidential term, like the Maya train, the interoceanic corridor, Felipe Ángeles International Airport and the Olmeca refinery, which have led to an increase in consumption and demand for cement,” Víctor Manuel Velázquez Rangel, president of the Cruz Azul board, was quoted as saying by Forbes in late November. 

Individually, the six big cement companies continue to grow following their own strategies.

While Cemex has remained somewhat quiet regarding its operations in the country and its intention to increase its focus on Europe after its stated withdrawal from Central America, other players like Holcim have announced acquisitions and investments.

On February 13, Holcim announced it will invest US$55mn in the expansion of its Macuspana plant in Tabasco state to include a grinding unit, which would allow the facility to boost production capacity to 1.5Mt/y. Meanwhile, on March 19, the company announced it had acquired two concrete plants belonging to Mexican company Grupo Comosa in Querétaro state. 

Cement producers have also stated they want to benefit from the construction of railroads. In November, then-general director of Canacem, Yanina Navarro, said that producers could gain significant advantages from freight lines such as the interoceanic rail corridor for transporting their output.

“Trains can carry double what can be transported [by truck] and you spend half the gasoline on longer routes. Cement is heavy and trains can carry it,” she said.