Global cement industry faces dual challenge of market contraction and decarbonisation push in 2026

Dear colleagues in the global cement industry,

As the World Cement Association (WCA) reflects on 2025 and looks ahead to 2026, the picture it paints is one of an industry in transition: structurally challenged by falling volumes in some markets, pressured by persistent overcapacity and cost inflation, yet propelled by an accelerating policy and technology agenda for decarbonisation. WCA President Wei Rushan set out that dual reality in his New Year message, and industry data and independent analyses illuminate both the scale of the adjustment and the choices firms must make.

Market performance and regional divergences
According to On Field Investment Research, global cement volumes fell by an estimated 1.5% in 2025, with a notable contrast when China is excluded, volumes outside China rose by about 3.3%. On Field estimated China’s production at roughly 1.69 billion tonnes in 2025, a year‑on‑year decline of around 7.4%. Those figures sit alongside sharper assessments: CEMNET reported a deeper contraction in China, citing a 15.8% fall in production during the first ten months of 2025, while Climate Action Tracker and other observers have described output at multi‑year lows, driven as much by structural demand shifts as by targeted decarbonisation policies.

Regionally, price and demand trends were heterogeneous. WCA cited broad price rises across much of Europe in 2025 and declines in East Asia, while Cement Insights modelled price inflation of between 6–9% in Europe and more moderate rises in Asia‑Pacific, reflecting stricter environmental regulation in Europe and differing demand dynamics. The US market is widely viewed as stable, Latin America as slowly recovering, and stronger growth is expected across the Middle East, Africa and South‑West Asia in 2026.

Trade, capacity and competition
Global seaborne trade remained sizeable in 2025, On Field estimated total global imports and exports at around 230 million tonnes, including 150–170 million tonnes of seaborne cement and clinker, yet new import tariffs had limited impact on established routing. The WCA notes that geopolitics and shifting domestic supply and demand were the principal drivers of changing flows, while independent analysis warns that tariffs alone will not correct structural overcapacity in many regions.

The industry’s competitive map is also shifting. Wei highlighted a continuing Asian concentration among the largest producers, and related reporting shows multinationals retreating from some African and Southeast Asian markets as regional players and Chinese firms expand, further altering market structure and investment patterns.

Policy, carbon and the economics of decarbonisation
Policy divergence on carbon management is now a defining commercial factor. Wei observed that carbon regulation momentum is splitting: Europe remains committed to deploying carbon capture and storage (CCS) at scale, while US support for CCS has weakened under the current administration, notably through reduced public subsidies. At the same time, mechanisms such as the EU’s Carbon Border Adjustment Mechanism (CBAM) are shifting commercial incentives: exporters and importers of cement and clinker must now factor decarbonisation into long‑term market access strategies.

WCA also flagged the inclusion of cement within China’s national carbon market in 2025 and the start of compliance trading in 2026. Industry reports corroborate that China’s shift to market‑based carbon pricing is already prompting manufacturers to explore low‑carbon binders, supplementary cementitious materials and process efficiencies. Market research projects for China foresee continued investment in green and digital strategies even as traditional volume drivers weaken: one industry report forecast modest overall market growth in value terms for 2025, supported by infrastructure stabilisation and urban renewal programmes, while separate analyses point to rapid expansion opportunities in the market for low‑carbon cement and concrete alternatives over the coming decade.

The financial burden of decarbonisation is becoming acute. The WCA has warned that rising carbon costs will have unprecedented financial and structural impacts on producers, and other industry commentary stresses that decarbonisation will create a two‑tier market in which low‑carbon product premiums may be necessary to sustain investment in costly abatement technologies. Transport and logistics also remain material cost drivers, transport can account for 15–25% of final delivered cement prices, and evolving shipping emissions standards may further lift distribution costs.

Technology, cooperation and industry responses
Against this backdrop WCA proposes three priority responses: reinvigorating cross‑industry knowledge exchange through conferences and webinars; strengthening technological empowerment with emphasis on new energy, digital transformation and low‑carbon solutions; and deepening cooperation with regional and national associations to raise the sector’s social licence.

These themes align with market research highlighting digital and intelligent manufacturing, circular resource models and low‑carbon product portfolios as strategic priorities. The emerging market for low‑carbon alternatives in China, for example, is projected by one industry study to grow significantly over the next decade as urbanisation and green policy incentivise substitution away from traditional clinker‑heavy mixes.

Strategic implications for producers and investors
For executives and investors focused on industrial decarbonisation, the immediate policy and market signals are clear:

• Carbon regulation is shifting transaction economics and supply‑chain footprints; producers exposed to CBAM or national carbon pricing must accelerate abatement planning or risk margin erosion.
• Overcapacity and regional demand weakness mean pricing power will remain constrained in several markets; efficiency, logistics optimisation and value‑added low‑carbon products will be the most reliable margin levers.
• Technology investments, CCS where policy and finance support it, fuel switching, digital optimisation and alternative binders, will be capital intensive and regionally uneven in payoff; firms should prioritise projects where regulatory backing, offtake premiums or cost offsets make commercial sense.
• Market structure is changing: local and regional players are gaining traction where multinationals recalibrate footprints, creating new partnership and M&A dynamics.

Wei Rushan’s message to the sector, calling for collaboration, openness and pragmatic action, reflects these realities. The coming year will be a test of whether the industry can reconcile near‑term commercial pressures with the long‑term investments required for deep decarbonisation. For practitioners engaged in industrial decarbonisation, that reconciliation will define which companies preserve competitiveness and which lag as regulation and customer demand migrate inexorably toward lower‑carbon solutions.