Uncertain outlook for Spanish cement sector

Uncertain outlook for Spanish cement sector
Published: 14 December 2011

Spanish cement consumption will continue to fall over 2012, and the companies estimate that the drop could range between 8% and 10%, which are figures similar to those of 40 years ago and would constitute a series of five years of falling. according to Oficemen’s President, Dieter Kiefer.

The group says that if this situation continues in the medium-term, cement companies, many of which are multinationals, might consider closing some of the plants located in Spain.

Today, the 37 cement plants located across the country operate at nearly half (54%) of its capacity, a "level difficult to sustain in the long term." "If the situation continues, at some point you have to think how to balance supply and demand," said the president of Oficemen.

"We don’t know when we will hit the bottom," he stated in terms of predicting the evolution of the sector. "The credit crunch and the economic situation make us pessimistic in the short term," Kiefer added at a news conference.

For now, the cement companies have partially offset the collapse in demand in Spain with exports, that cover 20% of production, and the closure of plants, which employ a total of 5890 workers. "Everything possible has been done to keep the factory workers during these years," he assured.

Against this backdrop, the association has demanded the new government to review the plans of budgetary stability and "arbitrate instruments to implement public works." "If there isn’t an infrastructure programme, the situation will not improve," he warned.

It also asked to maintain the reduced VAT rate for home-ownership and to restore deductions for the purchase of flats in order to release the existing stock.

Also, a “competitive” price for electricity was requested, given it constitutes its largest production cost and therefore, considers that a rise in the price of electric tariffs should not be applied. "We had a situation where the industry has funded the citizens, which is something not very understandable in the international arena," stated the director general of the association, Aniceto Zaragoza.

However, Oficemen is looking to tackle the current situation in which, according to their data, the consumption of cement will close 2011 with a decrease of 17%, reaching the vicinity of the 20.2Mt, a figure that has been "overwhelmed "sector the initial forecast of 10%.

Thus, the demand for this building material will reach a 64% contraction in the four years of the crisis, to which the fall already assumed and expected for 2012.