US-based construction material producer Texas Industries Inc has reported that it is beginning to see an improvement in volumes, just a few weeks after other major North American producers expressed cautious optimism of a recovery in 2011. However, prices have continued to fall amid competitive pressures. For the nine months to the end of February, Texas Industries marginally increased turnover 0.3% to US$446.1m but EBITDA plummeted 55.1% to US$14.9m and the loss at the pre-tax level increased to US$92.8m.
Turnover in cement declined 2.8% to US$205.2m and at the trading level there was a US$12.8m swing into a US$6.5m loss. Cement deliveries did, however, increase by 3% to 2.14Mta. In the third quarter, Texan volumes improved by 9%, though economic and climatic conditions remained unfavourable. In California, which represented 28% of cement sales, volumes declined by 5%, compared with the 20% drop seen a year earlier. Capacity utilisation is around 50% for the Californian works, compared with 75% and 65% respectively for the two works in Texas.
"Shipments were up compared to the same period a year ago," stated Mel Brekhus, CEO of Texas Industries. "However, since we had abnormally inclement weather in both periods, we will not know how much of the increase is attributable to improved market conditions until we see the extent of the weather related rebound in our fourth quarter."
Leading multi-nationals Holcim and HeidelbergCement have both said recently that they anticipate slight increases in North American volumes for this year, while 2010 figures point to a gradual recovery. While Holcim’s North American turnover was down for 2010, cement deliveries improved 3.7% to 11.1Mta thanks mainly to good Canadian markets and a full year’s benefit of the new 4Mta Ste Genevieve works. HeidelbergCement’s turnover in cement improved by 3.7% to €883m and by 11.6% to €921m in aggregates. Lafarge’s cement shipments in 2010 recovered 7.1% to 13.6Mt, as US volumes improved 5.8% and Canadian advances were even stronger at 9.9%. Titan, meanwhile, noted that its Mid-Atlantic market is now showing signs of stabilising but that the outlook for Florida remains bleak. Cemex – the largest cement producer in the United States – saw 2010 US turnover decline 11.8% and EBITDA dropped into a US$44.9m loss compared with a US$142.8m profit, and its trading loss widened by 43.6% to US$655.4m. In spite of poor weather in December, however, the group performed a bit better than expected and the under-spending of public funds to date suggests better volume growth in 2011.
According to figures by the USGS, although the rate of declining sales has abated significantly, volumes in 2010 were the lowest in 27 years and were nearly 59Mta or 45% below the record level of 2005. Last year, the effects of the US federal government’s stimulus programme for the infrastructure sector were reduced by project delays and cancellations by the states and municipalities. In the second half of the year, however, the public authorities approved several infrastructure projects, particularly in road building, and moreover, ongoing investments in road construction in the United States should provide a boost to demand. For the last three months of 2010 (Oct-Dec) shipments rose 14%, 3% and 8%, respectively, compared to the same months in 2009.
In terms of pricing, Italcementi, Titan and Buzzi Unicem all reported price erosions through 2010 with Buzzi noting an average decline of 8.8%. Although Texas Industries experienced a recovery in cement volumes, it saw average prices fall by 7.5%. The company is set to increase prices by US$5/st from April and most of this is expected to stick. While its California market saw a 13% recovery in prices in the third quarter, initiating a price rise in this market is much more difficult: no cement price increase is likely to stick until ready-mixed concrete prices there begin to improve.