NEWS

By Bless Aubrey Ogerio | October 29, 2026

Workers pour cement from a mixer onto a street as part of a road reconstruction project in Makati City in this BusinessMirror file photo.

WEAK infrastructure spending and sluggish construction activity are expected to keep Philippine cement demand subdued this year, although a possible dry spell could help construction work resume, according to industry executives.

Cement demand fell by 2 to 3 percent year on year as of September, Cement Manufacturers Association of the Philippines (Cemap) President John Reinier H. Dizon said, adding that the industry expects to match last year’s consumption of 34 million metric tons in 2026.

“And we expect, hopefully, we end up almost the same this year,” Dizon, who also heads the Federation of Philippine Industries, told reporters after the group’s annual business summit in Taguig on Thursday.

He said flat demand was understandable given persistent inflation and muted government spending, which have weighed on construction and limited the need for additional cement production.

Philippine Statistics Authority (PSA) data showed construction investment contracted by 14.8 percent in the second quarter of 2026, following declines in the previous two quarters.

Approved construction activity also fell by 31 percent year on year to 10,968 in August, the lowest since May 2020.

The Cemap chief said manufacturers were also grappling with higher energy costs, peso depreciation and uncertainty stemming from the conflict in the Middle East. These pressures compound the industry’s existing problem of excess capacity.

Philippine cement plants can produce about 52 million metric tons annually, compared with domestic demand of around 34 million metric tons last year, Dizon said. The mismatch has forced some manufacturers to operate below capacity, with some facilities downsizing.

“We have an overcapacity,” he said. “And you know, when you have that situation, of course, it’s tough for the manufacturing. Some sites have to downsize.”

The industry also faces competition from regional producers, including Indonesia, Vietnam, Thailand and China. Dizon estimated that China accounted for 30 to 35 percent of Philippine cement imports this year, a larger share than in previous years.

Still, cement imports have declined by an estimated 30 percent year on year following the imposition of a safeguard measure of about P349 per metric ton on imported cement, he said.

Shipments from Vietnam to the Philippines have fallen by about half as exporters redirect some supply to other markets.

Despite the decline in imports, Dizon said excess domestic capacity and weak demand leave little incentive for manufacturers to commit to new investments.

“I think investment is a function of whenever there’s good demand,” he said, noting that building a cement plant takes about four years and requires substantial capital.

Some expansion projects remain in the pipeline, although he suggested these may have been committed before current market conditions worsened.

Mixed outlook on El Niño

A possible El Niño episode could provide some relief to construction activity by allowing work, particularly concrete pouring, to proceed with fewer weather-related interruptions.

Dizon cautioned, however, that it could also hurt agriculture and affect energy supply. Heavy rainfall had disrupted construction activity in August, he added.

“Obviously, construction is more active when it’s dry,” he said. “In cement, you want to do concrete pouring when it’s dry. So, I guess there’s a little bit of benefit when it doesn’t rain.”

Dizon said cement demand generally tracks economic growth and could increase at a similar pace if the economy expands by 5 to 6 percent next year. Inflation, however, remains a risk to that outlook.

For the fourth quarter, the industry is hoping for a recovery in legitimate infrastructure projects under the government, following tighter controls and monitoring of spending.

“Hopefully, the game changer for Q4…will be the DPWH (Department of Public Works and Highways) side,” Dizon said. “With better controls and monitoring, we hope that there will be some resumption of legitimate projects.”

Source: Business Mirror