Europe: 2012 trends and outlook

Europe: 2012 trends and outlook
Published: 05 November 2012

Tagged Under: Europe Volumes Consumption 

Eurostat data published earlier this week shows that August was the eighth month in a row to register YoY declines in Eurozone construction output among member states – the latest confirmation that a slowdown in overall European construction activity and cement demand shows no real signs of relenting.
 
Figures from Eurostat show that compared with August 2011, output in August 2012 dropped 5.5 per cent in the Eurozone and 6.8 per cent in the EU27, with the strongest declines seen in Portugal (17.3 per cent), Slovenia (14.8 per cent), Slovakia (11.9 per cent) and the UK (11.6 per cent). Countries registering YoY increases in construction output in August included Romania (5.1 per cent), Bulgaria (1.3 per cent), Sweden (one per cent) and Germany (0.7 per cent). However, a MoM comparison showed a slight positive trend. Compared with July this year, overall construction output in August was up 0.7 per cent in the Eurozone and 0.2 per cent in the EU27.

Western Europe

Year-to-date cement data from a number of European countries have shown that even core markets such as Germany have seen demand waning. Generally-strong construction activity in Europe's largest economy was disrupted earlier this year by adverse weather conditions. In the first eight months of 2012 domestic deliveries were 2.8 per cent lower at 16.78Mt and for full-year 2012 cement consumption is expected to ease by around two per cent to approximately 27.4Mt. In France, the first nine months of 2012 saw a 6.9 per cent decline to 15.27Mt and cement consumption looks to be down in 2012, with a modest further fall envisaged for 2013. UK cement sales for the nine months to 2012 declined by 7.8 per cent YoY and construction output is forecast to shrink by 6.3 per cent this year and a further 1.4 per cent next year. However, looking further ahead, both France and the UK are expected to see modest improvements starting from 2014.

Southern Europe

In the ailing southern economies of Spain, Greece and Italy, latest cement sales figures offer little, if any, hope for the country's cement producers that business may be picking up. In Spain, year-to-date consumption fell 34.6 per cent to 10.61Mt while production contracted by 28.1 per cent to 17.555Mt. A full-year decline of 34 per cent is expected and going forward, Spanish cement association Oficemen forecasts around a 20 per cent fall in 2013. Reflecting the severe market conditions, Cemex Spain said earlier this week that it plans to reduce its local workforce by 21.2 per cent and make cutbacks to production. Meanwhile, over in Greece, Titan has said that demand for its products is continuing to decline at an annual rate of roughly 40 per cent. Full year demand is expected to be approximately 75 per cent lower than the levels recorded five years ago – back to levels last seen in the early 1960s. Italian cement consumption is also heading for another year of decline in 2012 with a 20 per cent reduction to 26Mt forecast by Italian cement association AITEC.

Central and eastern Europe

Ukraine reported weak data again earlier this week with September consumption falling 8.5 per cent, repeating the bad performance of August and pointing to a shift in the growth trend, according to Morgan Stanley. The outlook for Hungary is also pessimistic where the decline in the construction sector which started in 2006 has continued. Further decreases of around 17 per cent in 2012 to 1.9Mta were noted. In Poland, after an exceptionally-strong 2011, as work was being pushed forward to be ready for Euro 2012, cement consumption is likely to show some weakness in 2012 (down 3.6 per cent to 18Mt) and also 2013 before picking up in 2014.

Brighter spots

In the wider European region, Russian cement demand is expected to continue to grow albeit at a more modest rate. Consumption has been rising steadily YoY, from 49.4Mt in 2010 to 57.4Mt in 2011 and further to a forecast 63Mt by FY2012. The latest consumption data show demand at 27.8Mt for the first half of 2012, an increase of 14.4 per cent. Market expansion has been particularly noted in the central and southern federal districts. Turkey also appears to be another bright spot with the outlook for cement consumption optimistic. Demand is forecast to advance by around four per cent both this year and next and accelerating beyond.