Three Reasons Cement Companies Are as Durable as Their Product

Cement’s “value to volume” ratio, among other factors, sets cement companies in a profitable position.

Key Takeaways

  • Cement is heavy and cheap and therefore has a low “value to volume” ratio, making it expensive—often prohibitively—for competitors to ship their product long distances. This shields local cement companies from distant competition—particularly foreign competitors who face the added expense of import duties—allowing domestic producers to exercise pricing power in their local markets.
  • Limestone reserves—the chief raw material in cement—are typically owned by incumbent cement producers, and the cost to build a cement plant runs in the hundreds of millions of dollars. These barriers to new entrants in local markets further limit competition.
  • High demand for cement should continue for decades due to secular urbanization and population growth trends in emerging and frontier markets, where an expanding middle class and the shift from agriculture to manufacturing and services industries create a huge need for cement-intensive construction projects such as high-rise apartments, office towers, and modern transport infrastructure.

What did you think of this piece?


Harding Loevner Analyst Babatunde Ojo, CFA contributed research and viewpoints to this video.


The “Fundamental Thinking” series presents the perspectives of Harding Loevner’s analysts on a range of investment topics, highlighting our fundamental research and providing insight into how we approach quality growth investing. For more detailed information regarding particular investment strategies, please visit our website, Any statements made by employees of Harding Loevner are solely their own and do not necessarily express or relate to the views or opinions of Harding Loevner.

Any discussion of specific securities is not a recommendation to purchase or sell a particular security. Non-performance based criteria have been used to select the securities identified. It should not be assumed that investment in the securities identified has been or will be profitable. To request a complete list of holdings for the past year, please contact Harding Loevner.

There is no guarantee that any investment strategy will meet its objective. Past performance does not guarantee future results.

© 2024 Harding Loevner

Additional Articles

Fundamental Thinking

Disrupting Your Closet: How Customized Clothing Can Remake the Apparel...

Fundamental Thinking

Big Data Infects Life Itself

Fundamental Thinking

Craft Beer Is Going Flat. Can Craft Spirits Continue the...