By Kunal Bose
Global cement demand for the current year once again presents a kaleidoscopic picture of healthy rates of growth in uses of the binding agent in the Middle East, Africa and India but a fairly long unbroken period of demand compression in China. Europe, though not in its best economic health, is to see moderate demand recovery for cement, propelled by new house starts and infrastructure renovation. The World Cement Association (WCA) has forecast cement demand stability in the US, which incidentally has conceded the rank of the world’s third largest producer of the material to Vietnam.
Being the world’s by far the largest producer and consumer of cement, the comprehensive global picture of the demand outlook for 2026 will emerge only when China is factored in. The general consensus among China watchers is, cement demand in the country will fall for six consecutive years in 2026 in the absence of any perk up in house starts and continued slow investment in infrastructure. Hugely burdened with overcapacity, China is likely to finish this year using 1.6bn tonnes of cement, a fall of roughly 5% on the 2025 demand of 1.69bn tonnes. SunSirs, the leading provider of Chinese commodity data analysis, says global cement demand, including China will be down 0.2% this year. But excluding China, the world will see a fairly reasonable growth.
As with demand so also with output, global cement volumes declined by an estimated 1.5% in 2025 but was up 3.3% when China is excluded. Last year, the world production was 3.865bn tonnes. Chinese production was approximately 1.69 billion tonnes. On a downward trajectory since 2014 when production peaked at approximately 2.48bn tonnes, the Chinese industry is grappling with overcapacity, intense competition among producers leading to prices leaving low margins.
Even while economic reality surrounding mainly housing sector depression is leading to production fall, the Chinese 2025 cement output was nearly four times that of India’s 470m tonnes, showing what a behemoth of a cement industry the world’s second largest economy owns. India houses the world’s second largest cement industry with capacity close to 700m tonnes. In contrast to the situation obtaining in China, the Indian cement industry is growing capacity at a smart clip. The rating agency ICRA says in a report that India’s cement capacity is to expand by 42m tonnes to 44m tonnes during 2026-27 financial year. This will come on top of capacity addition of nearly 45m tonnes in the previous year.
House building boom and leap in infrastructure creation that caused rapid expansion in Chinese cement capacity in the past are now underpinning capacity growth in India. Despite Beijing staying firm to bring cement capacity in alignment with local demand so that unhealthy competition among producers is avoided, the task remains gigantic, not the least due to political resistance to plant closure at the local level. Data emerging from China often lacks authenticity. Research house Global Cement notwithstanding with its ear to the ground in China, therefore, says the country’s present cement capacity could be anything between 2.5bn tonnes and 3.5bn tonnes.
Whatever the actual capacity, the industry suffers the pain of low capacity utilisation of 50% to 53% in an environment of producers remaining locked in competition to sell? Price discounting is common. In capacity management, the focus should be more on the core intermediate product clinker from which cement is made after its grinding and mixing with gypsum, fly ash or slag. Moreover, from the point of toxic environmental footprint that the cement sector makes, the real culprit is clinker, for 80% of the sector’s air pollution occurs when the intermediate product is made.
China’s clinker production capacity was up from 447m tonnes in 2005 to around 2bn tonnes now, with production lines constructed since 2000 accounting for over 90% of prevailing capacity. In contrast, the Indian industry remains on a high-capacity growth phase staying ahead of demand rises. Like China India too is concerned about growing volumes of pollution of the rapidly expanding cement industry. The good thing that has happened with the Indian industry is that nearly the entire cement capacity is now based on dry process technology. This is highly energy efficient in drying the raw mix.
Looking at globally, the cement industry’s CO2 emissions were approximately 1.47bn tonnes in 2024, amounting to double the level found at the turn of the century. Encouragingly, cement related emissions had declined since their peak level at around 1.7bn tonnes in 2021. Helped by improved operational efficiency and production fall in China, last year saw the global cement industry recording a 7% decline in CO2 emissions. A major technological breakthrough happened in 2025 with Heidelberg Materials commissioning an industrial scale carbon capture facility at Brevik in Norway. The facility has capacity to capture annually an estimated 400,000 tonnes of CO2.
An Indian cement industry official says, producers across the world have a 2050 net zero roadmap, but to make this achievable, the industry and government cooperation is needed. Across the world, most prominently in Europe and also in China and India, cement makers are not only leaning towards the use of alternatives to fossil fuels but they are also constantly at work to reduce the clinker-to-cement ratio. Both the moves will lead to lowering of emissions. The mission will get a leg up with governments financially supporting adoption of low-carbon technologies.
Consider the case of India where the industry is already generating 538 MW through the waste heat recovery system (WHRS). This is, however, around half the industry’s potential to generate power by WHRS. At the micro level, Aditya Birla group Ultratech Cement, the world’s largest (excluding China) with capacity of 200m tonnes, will fully replace the fossil fuel-based energy with green energy (renewables plus WHRS) by 2050, as part of the RE100 commitment (a global initiative of corporate giants.) To carry conviction, the company has stopped making further investment in building thermal power capacity.
WCA president Wei Rushan has pointed out with a tinge of regret that cement producing nations’ “policies and momentum related to climate change and carbon regulations” have not only started diverging but in some instances “come into conflict.” For example, while Europe remains firm in its commitment to use carbon capture and storage (CCS) in cement mills, the momentum behind CCS in the US is slackening, thanks to the Trump Administration axing public subsidies that are key to installing CCS facilities, says Rushan. Sounding a note of caution for exporters and importers of clinker and cement, Rushan says under the Carbon Border Adjustment (CBAM), they will be under pressure to decarbonise “supply chains in emerging markets in order to maintain their long-term access to developed markets.” (IPA Service)
