Cement use slumps reflecting slowdown in construction activity

• Total cement use fell 30% in Jan-Sept to 3,782,000 MT
• Local cement production fell 22.4% to 2,566,000 MT 

The cement use from both local production and imports, which acts as a close proxy for the construction sector heft and overall economic dynamism, slumped in the nine months of 2022 compared to the same period last year.
Sri Lanka’s economy shed an 11.8 percent output in the third quarter from a year ago, bringing the nine-month contraction to 7.1 percent, on course to record the deepest decline in the country’s post-independent history. 

The construction sector slumped 33.2 percent in the quarter, logging its fifth straight quarterly decline and the worst in years. In the nine months, the sector declined by 16.9 percent over the same period in 2021. 

The cement use meanwhile fell sharply by 44.2 percent in September to 331,000 metric tonnes (MT), bringing the nine-month decline to 29.8 percent to 3,782,000 MT from the same period last year.

In the corresponding period of 2021, the total cement use was 5,390,000 MT, even amid the shortages began to appear from the second half of last year, due to the dollar shortage, restrictions on imports and maximum price. 
The local cement production also followed suit, declining 22.4 percent to 2,566,000 MT in the nine months of 2022, clearly reflecting the sharp slowdown in the overall construction activity. 

Construction has been one of the leading sectors that powered the country’s post-war economic boom.
However, the public investments in many infrastructure projects, which predominantly came through borrowed foreign money, were cited as one of the main reasons for the collapse of the economy, as majority of them failed to generate the expected returns to service the loans taken. 

Thus, the government had to assume more borrowings to repay the existing loans, piling up borrowings to unsustainable levels.