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The cement industry in Europe: West and East

World Cement,

The IHS 10-point fact sheet mentioned earlier suggests that recent policy actions by the European Central Bank and EU governments have reduced the financial risks related to the Eurozone sovereign-debt crisis and helped to reduce long-term interest rates in the hardest-hit economies. However, this year, the economies in Southern Europe will remain in deep recession, mostly through tough austerity programmes and very high unemployment rates. The problem is that this will drag down the economies in Northern Europe.

In 2012, there was a general decline in demand for construction materials, although there was a small degree of stability in Germany and Northern Europe. Construction activity in the UK and the Netherlands weakened mainly as a result of lower infrastructure spending in the UK and lower residential spending in the Netherlands. Decreases in sales also took place in France and Belgium. Perhaps more disturbing was the dramatic cement volume decreases in Greece and Italy, by 40% and 20%, respectively. Taken as a whole, IA Cement is predicting a 5% decline in Western European cement consumption this year. However, that could change if there is further market turmoil.

The picture in Eastern Europe is mixed. Holcim reported that several infrastructure projects were cancelled, which presented the company with difficult market conditions. Likewise, HeidelbergCement has commented on the decline in demand for construction materials in Poland, Hungary and the Czech Republic. There is talk of some recovery in Romania and Bulgaria from a very low base considering market demand has fallen by 40% since the peak. Cement demand in Slovakia and Slovenia should begin to stabilise during 2013 following the fall in the housing market in 2012.

A backlog of construction in housing and public works, plus major projects such as the 2014 Winter Olympics and the World Cup in 2018, is providing a somewhat upbeat picture of the cement industry in Russia. The Eurocement Group is forecasting that cement consumption in the country will rise by 8 – 10% this year. This would put cement consumption at 70 million t. It remains to be seen if this ambitious target can be achieved. A slowdown in the construction market in Ukraine is impacting cement volumes, but as the country remains somewhat isolated from developments in Western Europe, there could be a recovery in production by 2014.

Written by Paul Maxwell-Cook. This is an abridged version of the full article, which appeared in the July 2013 issue of World Cement. Subscribers can view the full article by logging in.

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