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Local authority spending underpinning Italian cement demand

Local authority spending underpinning Italian cement demand
By ICR Newsroom
10 April 2024


Italian cement output started the year strongly, expanding 14 per cent YoY in January 2024, according to the Italian concrete association, Federbeton. This follows a seven per cent expansion in December 2023.
 
Import and export data, which lag production data by one month, show grey cement imports increased by 10 per cent YoY to 126,803t in December 2023, with a total CIF value of EUR11.9m or EUR94/t as value per tonne, up from EUR87/t in November. For 2023 as a whole, import volumes were up 21 per cent YoY to 1.86Mt.
 
Meanwhile, grey cement exports rose 24 per cent to 106,032t in December, with a total FOB value of EUR10.4m or EUR98/t, down from EUR102/t a month earlier. For 2023, export volumes increased by 29 per cent YoY to 1.58Mt.
 
Outlook
Italian construction sector production has accelerated since mid-2023 and expanded a robust 14.8 per cent YoY in the first month of 2024, according to the Italian statistics office, ISTAT.

Meanwhile, the confidence climate index for the sector, reported by ISTAT, improved to 105.8 in March from 104.3 a month earlier. However, Italian consumer confidence remains weak. The personal climate confidence measure slipped to 94.6 from 95.2 in February, suggesting household spending will remain subdued. As such, local public sector work, which accounts for roughly 45 per cent of Italian cement consumption, is expected to remain a key driver of the Italian construction sector and in turn, of cement demand at least through the near term. Local authority payments, rose 33 per cent YoY in March, totalling EUR4.2bn. Buzzi SpA, which owns cement 11 plants in Italy, noted last week that “infrastructure investments will remain the main driver of the market, with more evident effects in … Italy”.
 
For Italian cement exporters, improving demand from Spain will help to offset lingering difficulties in France somewhat. Production in the Spanish construction sector accelerated solidly in the final quarter of 2023 and expanded 15.1 per cent YoY in January, according to data from the European Union statistics office, Eurostat. Meanwhile, Eurostat data shows French construction production contracted 2.3 per cent YoY in the first two months of 2024, adding to the 2.1 per cent decline reported in the fourth quarter of 2023.
 

 

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