Exports of construction materials consolidate as a good business opportunity

July 19, 2023

The construction materials export sector has driven the recovery of the economy after the pandemic. It will be a key player in the short term due to its importance for the generation of wealth and development in the economy.

construction materials, iron and steel products, architectural structures, Más Colombia

Building materials are used throughout the world to manufacture housing, premises, offices and large infrastructure works. Although they are produced in many countries, Colombia has been gaining relevance in the sector, to the point of becoming an excellent business for many companies in the country.

The construction materials sector encompasses the activities carried out by companies engaged in the production and marketing of various essential elements for the construction of buildings and civil works, among others.

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Colombia has a large amount of inputs for the construction sector, to the point that more than 90% of its supplies are made from domestic products. It has raw materials and key inputs such as sand, clays, cement, lime, plaster, stone and ceramic products, metal, plastic, rubber and tools, among many others.

In the context of the world market, Colombia has experienced a weighted annual growth of 8.5% in the last two decades, which positions the country with a 0.24% share of the global market. According to AmCham Colombia, at least 108 Colombian construction products have export potential in the U.S. market, including aluminum products, pipe fittings, and iron alloys.

However, in order to take advantage of its comparative advantages, Colombia must address current market needs for the development of the sector in a context of economic recovery.

Exports of building materials products have recovered

Despite the fact that Colombia’s exports of construction materials products had been in the doldrums, with a reduction in the level of sales of 48.8% between 2012 and 2020, as of 2021 the sector had an extraordinary recovery.

According to DANE figures, Colombia’s exports in the construction materials sector grew by 86% between 2020 and 2022, reaching sales of more than US$220 million.

Although this sector includes goods in more than a dozen economic activities, in Colombia only five of them account for more than 90% of exports.

In recent years, the largest sales have been in iron and steel casting, with products such as elbows, bends and sleeves, and pipe fittings, among others (35.3%). Between 2021 and 2022, exports increased from US$66.2 million to US$79.4 million and were led by Tenaris Tubocaribe, which concentrates more than 90% of external sales.

The second product segment comes from the manufacture of metal products for structural use (19.2%). These increased from US$32.6 million to US$46.7 million between 2021 and 2022, with the leadership of companies such as Gonvarri, Dimel Ingeniería, Metecno de Colombia, Fábrica de Estructuras Sade Eléctricas and DOKA.

Products from the manufacture of clay materials for construction occupy the third place in terms of foreign sales (22.7%). They had a slightly decreasing performance, although they remain within the annual sales average of 33 million dollars. The protagonist in this case is Compañía Colombiana de Cerámicas.

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In fourth and fifth place are products from the manufacture of concrete, cement and gypsum articles (12.6%) and the manufacture of plastic articles (10.8%), with sales close to US$50 million per year. Among the main exporters of these product groups are companies such as: Eternit, Etex, Schneider Electric, Tecnología en Cubrimiento, Azembla, Ajover Darnel and Rimax, among others.

The main destinations for Colombian construction materials exports in the last two years were the United States (34.3%), Ecuador (10.9%), Panama (9.8%), Canada (6.5%), Peru (5%), Chile (3.6%), the Dominican Republic (3.5%), and Venezuela (3.2%).

The construction materials market has expanded over the last two decades

According to a market study with projections to 2032, carried out by Colombia Productiva, the sector has been growing at an annual rate of 5.8% worldwide during this century, with China as the main player and with a growth much higher than that of the United States.

The growth of the urban population was the main driver of the demand for infrastructure, residential and non-residential construction, due to urbanization processes. According to projections, aluminum and steel production is expected to grow at an annual rate of 2.9% and 2.6%, respectively, during this decade, according to Colombia Productiva.

What have the market leaders focused on?

The market leaders have focused on diversifying the market, developing new production technologies for construction materials or offering exportable solutions for construction with high added value.

China, for example, has followed several of these routes. It has invested in existing companies or projects, which has positioned it globally in sectors such as cement. Likewise, by strengthening research, it has achieved solutions for modular or prefabricated construction methods that allow it to construct buildings with more than 50 stories in half a month.

The United States has consolidated its offer in two segments: one is skilled labor, with programs such as the United States Army Corps of Engineers (USACE). The other is the development of new construction materials with products such as cross-laminated timber, a renewable resource that does not require the use of fossil fuels during its production, with which it is capturing markets in the Middle East and Latin America.

Germany has focused on the development of digital infrastructure, and Japan on the development of materials and construction technologies.

The housing programs in Latin America, aimed at the development of infrastructure for trade, tourism, energy transition or the rural sector, concentrate the initiatives that are driving the production of building materials in this region of the planet. Colombia has much to learn from all these experiences.