Ukrainian cement and concrete producers are capable of ramping up production to meet reconstruction demands under any scenario, according to the results of a survey conducted by CBR last year among cement producers and consumers.

“The study revealed that even in times of great uncertainty, such as the current situation with reduced international funding and extremely limited state budget resources, both producers and consumers of cement are ready to quickly restore and expand capacity. They are prepared to invest in order to meet the demands of reconstruction,” said CBR researcher Tetiana Sytnyk during a presentation of the findings at a meeting of the Confederation of Builders of Ukraine.

Cement production resumes in 2023, consumption tied to state funding

According to the CBR study, cement production plummeted in 2022 due to a drop in domestic demand – falling to 5.4 million tonnes from 11 million tonnes in 2021. However, by 2023 and 2024, production stabilized at 7.4 million tonnes and 7.97 million tonnes, respectively. Experts surveyed believe that 8 million tonnes is the maximum feasible production during wartime. Once the war ends and reconstruction begins in earnest, peak production could reach up to 12 million tonnes – but not until the third or fourth year of recovery.

The main concern within the industry is whether there will be enough cement to meet reconstruction demands. The issue was underscored by a 2022 study from the State External Expertise Agency, which was based on an optimistic scenario – assuming sufficient recovery funding and a three-year timeline. That model forecasted a shortage of construction materials, including cement.

“Now, however, the professional community assesses the industry’s tasks with the experience of three years of war in mind. Reconstruction will begin with demining, reinforcing the front lines, and restoring energy infrastructure. Large-scale construction will likely not begin until the third or fourth year,” said Pavlo Kachur, head of the Ukrainian Cement Association (UkrCement), in comments to Interfax-Ukraine.

At present, plant capacity utilization varies across regions. Plants in western Ukraine are operating at higher loads, while those in the south and east remain underutilized. In 2022, cement plants operated at a loss – the volume produced was insufficient to cover fixed costs – yet they retained their staff. In 2023, production volumes were sufficient to break even.

The study also included interviews with consumers of cement – manufacturers of concrete, aerated concrete, and other building materials – representing businesses of all sizes across Ukraine.

“Our cement is considered competitive both in terms of quality and, surprisingly, even price. It increased by 20% in 2023 and by 10% in 2024, which is in line with inflation,” said Kachur.

Two-thirds of surveyed consumers reported increasing production in 2023, 20% had returned to pre-war levels, and some even exceeded those levels – mainly in concrete for infrastructure projects. Still, by 2024, survey participants were more cautious, citing risks related to unstable state funding.

Industry ready to invest in modernization

According to Kachur, the overall market began to experience a slight decline in cement consumption in 2023. This is due to the fact that large-scale recovery and defense projects depend heavily on government funding, while civilian developers remain hesitant to fully resume pre-war levels of activity. Consequently, residential and commercial real estate projects have decreased significantly compared to pre-war numbers. He also flagged the issue of human resources as critical: new specialists must be trained to replace mobilized or relocated workers.

“Time will be needed for training, planning, and securing financing—and cement producers will use that time to fill the market, primarily by investing in modernization and capacity expansion. For example, two major projects to build new state-of-the-art kilns are already ready in Kryvy Rih and Ivano-Frankivsk, and BalCem’s plant (which, before the war, had a capacity of 4 million tonnes but produced only about 200,000 tonnes) is also being considered,” he said.

The study notes that building brand-new plants is unlikely, but modernizing existing kilns can be accomplished within a year. According to estimates, at least two plants will launch additional kilns, boosting production capacity by 2 million tonnes. For instance, Kryvyi Rih Cement has obtained a special permit to develop the Maryanske limestone deposit (60 km from the plant) and plans to build a kiln at the site to produce clinker. Other potential projects include the modernization of the nationalized Pushka plant in Kramatorsk and the Balaklia-based BalCem facility.

“Cement companies are ready to make rapid investments in modernization and to launch additional kilns once recovery begins. They’re waiting for clear signals to proceed – such as the allocation of reconstruction funds or a surge in demand to at least 9.5 million tonnes,” Sytnyk explained.

Ukrainian cement competes on equal terms with European imports

Experts also flagged the potential return of cement imports as a contingency for a spike in reconstruction demand. Currently, Ukraine does not import cement – it exports it.

“We must be honest: exports have actually saved our industry during the war. In 2021, pre-war cement exports were about 56,000 tonnes. In 2024, that figure is expected to hit 1.7 million tonnes – about 15% of our production. We consistently tell our neighbors: ‘Once domestic consumption in Ukraine increases, everything will change. It will be more profitable to supply cement to Ukrainian construction sites,’ and that will bring imports back into play,” Kachur said.

The CBR study concluded that if reconstruction projects are primarily funded by the EU, there is a high likelihood that European cement will be imported – especially for infrastructure development.

Kachur also pointed to risks to the domestic industry at this stage, noting that the world is currently facing a global cement surplus. Developed countries are capable of meeting Ukraine’s reconstruction needs, which could hurt local producers.

“I want to make this clear: during the recovery phase, Ukraine’s market must be as localized as possible with domestic products. Only countries that supported us during the war should have access. For those that backed the aggressor yet now want to benefit from our reconstruction, we must apply strict protectionist measures,” Kachur said.