Ukraine’s cement producers are confident they will be able to produce enough of the material to fully cover domestic demand during reconstruction.

According to a study by Ukrainian market research firm CBR, before the war in 2021 Ukraine produced 11mn tonnes of cement. This fell to 5.4mn tonnes in 2022, but production has since recovered. In 2023 and 2024 cement production stabilised at 7.4mn and 7.9mn tonnes respectively.

The industry expects demand to accelerate with large-scale reconstruction. The exact amount of cement required during a reconstruction phase will depend on how much funding Ukraine is able to attract into infrastructure investments. Ukrcement estimates that if Ukraine receives around $35bn annually, 12.6m tonnes of cement will be needed – a figure that is “quite realistic for the industry”, according to Kripka.

Whilst earlier studies suggested that Ukraine would face a shortfall in domestic supply once reconstruction begins, estimates have been revised to account for the fact that large-scale construction projects will likely not begin in earnest until three or four years after a stable ceasefire has been achieved.

War-time disruption

Ukraine’s cement producers were hit hard by a precipitous drop in demand following the full-scale invasion, as construction projects were put on hold or cancelled. “The war affected the construction industry and [cement] production levels are closely tied to market demand,” says Liudmila Kripka, executive director at Ukrcement, Ukraine’s cement industry association.

It’s not just decreased demand that has affected production. As is the case with almost every sector of Ukraine’s economy, the disruption caused by war has hit the bottom line of cement producers, making it much harder to turn a profit:

“The rising cost and reduced availability of energy and transport – especially due to surging fuel prices – significantly increased costs for cement producers,” said Kripka. She added that construction sites in or near combat zones remain difficult to supply, further impacting on operations.

Despite these conditions, Ukraine’s cement plants remain operational. “Enterprises continue to work and produce cement. Because this product is essential not only for reconstruction, but also for defence,” Kripka said. Whilst in 2022 cement plants operated at a loss, they were still able to retain their staff, and the recovery of demand in 2023 and onwards was sufficient for producers to return to profitability, according to the CBR study.

As bne IntelliNews has previously reported, Ukraine’s construction sector is beginning to show signs of recovery, with significant increased activity in Ukraines’ western regions.

While domestic demand recovers, exports have become a crucial lifeline for Ukrainian cement producers. "Exports have actually saved our industry during the war," Ukrcement head Pavlo Kachur told Interfax Ukraine. "In 2021, pre-war cement exports were about 56,000 tonnes. In 2024, that figure is expected to hit 1.7mn tonnes – about 15% of our production."

Concentrated market

Ten years of war have seen four of Ukraine’s cement factories cease operations. Two plants in Crimea and Donetsk Oblast were lost to Russian occupation in 2014. The Balcem plant close to the front line in Kharkiv oblast was badly damaged in 2022, and the Ukrainian government seized a fourth plant from its Russian owners following the start of the full-scale invasion.

Today cement production in Ukraine is dominated by three companies – CRH, Kryviy Rih Cement and Ivano-Frankivsk Cement.

In October year, Irish multinational CRH completed the acquisition of Dyckerhoff group’s Ukrainian assets for €100mn, marking the largest foreign investment in the country’s construction sector since the war began, and leaving CRH with five of Ukraine’s eight operational cement plants.

Dyckerhoff was previously owned by Italy’s Buzzi, which was blacklisted by Ukraine's National Agency on Corruption Prevention as an international sponsor of war in June 2023.

Kripka said the deal could signal growing confidence in Ukraine’s industrial potential. “When a large international group invests in business development in Ukraine, it leads to growth in other industries and serves as an important signal to other large investors,” she said.

The acquisition has however raised concerns of a “cement cartel” emerging in Ukraine as production is concentrated in the hands of just three companies. According to Forbes Ukraine, the deal will leave CRH with 46% of Ukraine’s cement production, with Ivano-Frankivsk Cement accounting for 44% of the market, and Kryviy Rih Cement at just under 10%.

CRH received approval for the deal from the Anti-Monopoly Committee of Ukraine  in September last year, but this approval was annulled in February 2025 by the Kyiv Commercial Court following legal action by Ukrainian construction company Kovalska, according to Interfax Ukraine.

The court found that CRH had already violated aspects of the merger agreement, including appointing a supervisory board member of one of CRH’s subsidiaries to an executive position at Dyckerhoff. CRH has said it will appeal the decision.

Ready to ramp up

The cement industry is actively preparing for increased demand once reconstruction begins: “The cement industry is perhaps the only heavy industry in Ukraine where players have modernised their production facilities,” Kripka said, noting that production can be scaled to 10.5mn tonnes relatively quickly. “The industry is ready to modernise and expand existing production – every operating cement plant has investment plans for modernisation,” she added.

A number of companies have already taken steps toward expansion. Kryviy Rih Cement and Ivano-Frankivsk Cement have finalised plans to build two new kilns at their facilities with a combined capacity of 2m tonnes. Other potential projects include the modernisation of the nationalized Pushka plant in Kramatorsk and the Balaklia-based BalCem facility.

Protecting domestic production

Ukraine’s cement producers are naturally keen to minimise the amount of cement imported from abroad for reconstruction.

According to the CBR study, the EU’s leading role in funding reconstruction will make it very likely that cement is imported from Europe to meet at least some of Ukraine’s needs.

Kripka strongly advocates for prioritising domestic cement production during reconstruction, warning that over-reliance on imports could undermine Ukraine’s economic recovery. “The use of products from domestic manufacturers ensures the localisation of production, which reduces dependence on imports and guarantees a stable supply of materials, jobs for thousands of Ukrainians,” she said.

She added that domestic cement production has a substantial multiplier effect. “Every hryvnia invested in cement production will generate an additional four to five hryvnias for the economy,” Kripka noted. “It is quite important that when rebuilding the country, domestic building materials are used, which will leave added value in the state’s economy.”

While the industry is poised to respond to reconstruction needs, Kripka said targeted government support will be essential. She cited potential measures such as tax breaks, subsidies for modernisation and incentives for reducing clinker content and increasing alternative fuel usage. The government should also “promote the development of the domestic market, ensuring transparent conditions for business operations,” she said.

While uncertainties remain, particularly around the trajectory of the military conflict, Ukraine’s cement producers are preparing for the long term. “The goal should be to implement a fair reconstruction process and maximally involve domestic production in it so that the Ukrainian economy receives the greatest possible effect from the reconstruction process,” Kripka said.