Mexico-based multinational cement maker Cemex says it is in a "good position" to avoid any potential negative effects from US import tariffs, as the company plans to increase product prices should Washington escalate its global trade war.
Cemex's cement imports from countries such as Vietnam, Turkey, Saudi Arabia and Greece could be hit with high tariffs in July if US president Donald Trump decides to follow through on a plan he announced early this month, but quickly put on a 90-day pause after financial markets roiled.
Cemex is prepared to increase prices on cement products to help offset additional costs brought on by these tariffs, the company said today.
"We have already communicated to our customers that, should those tariffs be implemented, we would be introducing a surcharge immediately to pass along to consumers that cost increase," said chief executive Jaime Muguiro.
The company did not detail how much these price increases would be.
Cemex noted that the company imposed similar measures in 2022 to account for high energy price inflation, when its incremental costs suddenly increased by $60/t. "We were able to increase prices to more than offset that cost, preserving margins," Muguiro said.
But the company also plans to increase domestic production in the US to reduce its need for seaborne imports.
"We're producing more cement locally, and we do plan to replace imports," Muguiro said.
"I think that we are in a good position to navigate current uncertainty on tariffs," he continued.
Part of the company's plan to deal with potential high tariffs on suppliers like Vietnam is to supply more from its Mexican plants, shipping by rail from a plant in Torreon in central Mexico and by sea from east Mexican plants. Mexican imports are currently exempt from tariffs under the US-Mexico-Canada (USMCA) free trade agreement. But the administration had previously sought to hit Mexico with a 25pc tariff, which US cement makers said "could adversely affect energy and national security".
Cemex's consolidated domestic grey cement sales volume totalled 10.2mn t in the first quarter, down by 2pc on the year.
In the US, domestic grey cement sales volumes were down by 3pc on the year, while prices fell by 1pc. Cemex attributed this decline to unusually cold winter weather in key markets during the quarter that hindered construction activity. But lower demand allowed the company to complete half of its scheduled annual maintenance, and Cemex expects sales volumes to be supported by higher infrastructure spending in the near future.
Sales volumes in Mexico fell by 9pc, while prices fell by 14pc on a US dollar basis, as a new administration in the country contributed to an expected slowdown in construction activity during the quarter. Cemex expects a pickup in sales volumes in the second half of the year, when the new government executes its budget for rural roads and social housing.
Declines in these regions offset gains in cement sales volumes and pricing in Europe, the Middle East and Africa and South, Central America and the Caribbean during the quarter.
Cemex also said that its energy cost per tonne of cement produced in the first quarter fell by 17pc on the year. This was because of lower power and fuel prices, as well as improvement in clinker factor and thermal efficiency, the company said.
Cemex posted $3.6bn in revenue in the first quarter, down by 1pc from the same quarter the prior year. The company also reported a record profit of $734mn during the quarter, driven primarily by the sale of its operations in the Dominican Republic.
