Latest global consumption data shows that monthly volumes in Western Europe are strengthening and in emerging Europe, Russia and Poland have posted robust results. In North America, the market remains subdued and South America paints a mixed picture. Over in India, cement producers have had a disappointing start to their current fiscal year, while China continues with a successive rise in volumes.
A recent report by IHS Global Insight, presented at Cemtech Europe, shows that while global construction activity has contracted for three years, it is expected to grow 4.4% in 2011. While non-Japan Asia dominates the construction outlook, North America has continued to struggle in 2010 and Western Europe lags in recovery.
The report states that while European economies and construction markets have mostly hit the bottom, the climb out is expected to be prolonged. Cement consumption in the region is forecast to remain weak in the near-term and building demand slow and steady. Spain, Portugal and Greece will have the weakest construction markets with Turkey offering the strongest growth potential in the region. The story for the UK, however, is very mixed but demand will be supported by the London 2012 Olympic Park construction. Eastern European markets are expected to rebound faster and stronger than Western, but they are much smaller in size.
In terms of recent monthly results, volumes across France, Germany and the UK rose to mid-to-high single percentage points in August 2010, according to figures from Jefferies International. However, over the past three months, of the three countries, only the UK has managed double-digit growth of 10.0%. Spain has seen declines in volumes of -11% over the three-month period.
Russia, on the other hand, may be re-entering the growth path pursued in the years immediately before the crisis, which is positive news for the cement industry. Domestic consumption over the last three months has risen 15.9% and August saw the fourth double-digit percentage increase in five months. Poland has overcome the harsh weather conditions experienced at the start of the year and is performing well, reporting a 10.7% rise in the last three months. The outlook for the country is optimistic given road, railway and airport infrastructural investments, preparations for EURO 2012 and EU funding for housing development.
Over in the United States, July saw the first decline in volumes since February with total shipments at 6.7Mt. This was nearly 7% less than shipments in July 2009. Year-to-date shipments through July were 38.9Mt, down by about 5% from those of the same period in 2009.
Results in South America remain mixed with Brazil continuing to be the region’s main driver. For the 12 months between August 2009-July 2010 consumption was 55Mt – a YoY rise of 8.6%. In contrast, over the past three months Mexico has been experiencing continued weak volumes (-6.1%) while Argentina and Bolivia saw rising and falling volumes respectively in the same period.
August this year saw China register its 19th consecutive monthly rise in volumes since January 2009. For the past three months, both China and Thailand have seen increases of 12.2%. Korean volumes, however, were down -2.5% during the period. Egyptian consumption has kept growing at a reasonable pace throughout the first six months in 2010 to reach 25.7Mt – up 7% YoY. India appears to be entering a period of slowdown with 1QFY10-11 rising by only 6.24 per cent – the lowest increase in the last 11 quarters and almost halving against the same period last year (12.42%). A lack of major infrastructure projects is being blamed for the fall in demand.