Philippine Cement Demand Faces Continued Decline Amid Infrastructure Spending Cuts
Weak cement demand seen to persist this year
Image: Inquirer
Cement manufacturers in the Philippines predict stagnant demand for 2023 due to reduced government infrastructure spending, which constitutes about 40% of total cement demand. The industry faces challenges from inflation and increased imports, with expectations for a slight recovery in 2027 linked to pre-election spending.
- 01Cement demand is expected to remain flat or contract by single digits in 2023 due to slow government infrastructure spending.
- 02Infrastructure spending in March 2023 fell by 48% year-on-year, totaling P59.1 billion.
- 03Philippine inflation surged to 7.2% in April 2023, impacting consumer confidence and household finances.
- 04Cement imports are increasing despite safeguard duties aimed at protecting local manufacturers.
- 05The Department of Public Works and Highways received only P529.6 billion in funding, significantly less than its proposed P881.3 billion.
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Cement manufacturers in the Philippines, represented by Cement Manufacturers Association of the Philippines (Cemap) president Reinier Dizon, are not anticipating growth in demand for 2023 due to a slowdown in government infrastructure spending, which is crucial as it accounts for approximately 40% of total cement demand. Despite the typical increase in construction activity during the dry season, government spending remains sluggish, with infrastructure outlays plunging 48% year-on-year to P59.1 billion in March. Additionally, inflation reached 7.2% in April, further straining household finances and consumer confidence. Although there are hopes for a recovery in 2027 driven by pre-election spending, challenges persist, including a rise in cement imports that undermine local manufacturers despite existing safeguard duties. The Department of Public Works and Highways has also received significantly less funding than initially proposed, limiting infrastructure activity.
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The slowdown in cement demand is expected to affect construction jobs and related industries in the Philippines, as reduced infrastructure spending limits overall economic activity.
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