The heavy materials landscape is undergoing major changes, driven by the activities of these four major players:
Top International Players. With the rise of China and India transforming global markets, established international players lost market share. They not only suffered a decline in volume but also weren’t able to create a foothold in the biggest market, China, due mainly to regulatory restrictions. Their focus in past years was to optimize their footprint and vertical integration network (such as through asset swaps) and undergo comprehensive cost programs. But the slowdown in China represents new challenges.
Chinese Players. In 2013, two Chinese players, Anhui Conch and CNBM, were ranked as the top global cement players. The government-driven consolidation in the Chinese market has led to the rise of other Chinese giants with a capacity over 20 metric tons of cement. These players, while still primarily focused on the Chinese market, have international expansion plans in light of the slowdown in China and looming overcapacity.
Regional Champions. Market growth in emerging countries made room for local companies to develop into local and regional champions. Newcomers like Ultratech and Votorantim increased their capacity by organic growth or through M&A. Their primary advantage in local markets is that they find it easier than decentralized majors to build relationships with important decision makers. With their ambitious expansion plans and growing financial power, these regional players are gaining market share and pose a serious threat to established companies.
New Entrants. The merger of Lafarge and Holcim is a game changer in the industry, not only creating a new number-one heavy materials player but also providing room for private equity companies—new players that previously had maintained only a limited presence in the sector. A multitude of small to medium-sized local players looking to enter heavy materials will need to collaborate with cement experts to build operational and local market know-how.
Arne Burfeind talks about new approaches to asset-light business models.