Cement market in Romania ’will stagnate in 2009’

Cement market in Romania ’will stagnate in 2009’
Published: 03 March 2009

The cement market in Romania will stagnate in 2009, because the lack of liquidities and difficult access to financing will have an important impact on consumption, the president of CIROM, Mihai Rohan said.

Last year the overall cement production was of 10.7Mt, on the rise by 6.4% against 2007, according to CIROM. Domestic deliveries were of 10.6Mt in 2008, 8.6% higher than in 2007. In 2005 the cement consumption was 292kg/capita, in 2006 362 kg/capita, in 2007 461kg/capita and in 2008 it reached 516kg/capita.

“Last year the cement industry continued a rising rate but the increase was more reduced. While in 2007 the cement production registere d a record increase of 24% in 2008 the growth was only 6.4%. The cement consumption grew by 12%. In 2009 we will witness a stagnation in the cement market,” said Mihai Rohan, the general director of Carpatcement Holding.

In the short-term, there will be a reduction in activity because of the stagnation of the residential sector. Developers will concentrate on the completion of already begun projects while new projects will begin only when real not potential clients are found. The president of CIROM considers that infrastructure and agro-industrial works will continue to be important engines for the building material industry but there could be liquidity problems if European funds cannot be accessed. However there are estimates indicating a 0.2% increase in 2009 against 2008.

As for the cement sales price, Rohan said it was determined by costs and the report between demand and offer at a certain moment. The evolution of production costs, such as raw materials, energy, fuel, transport and resulting financial influences like the exchange rate will have a significant impact on prices. “Compared to 2007 list prices of 2008 grew by 10-15% . In 2008 we did not increase list prices,” said the director of Carpatcement Holding.

Cement price rises in 2008 were determined by the evolution of production, sales and marketing costs, of the leu/euro expchange rate and the crisis effects on different industries and markets in the Romanian economy. The evolution of the cement market this year will depend on the evolution of the national economy in general. An important role is held by the Romanian economic and budget policy of the new government about infrastructure projects. The local cement market is dominated by three large producers: Lafarge (France), Heidelberg Cement (Germany) and Holcim (Switzerland).