CEMBUREAU quarterly economic report: Continuous fall in EU cement activity despite overall EU economic recovery

Cement activity during first two quarters of the year continued to fall despite signs of recovery within the EU27 economy.

According to data issued by EUROSTAT, industrial output in the EU27 rose by 2.7% between first and second quarter of 2010 and 6.6% compared to 2009 half-year results. During the first six months, output grew in all EU countries except Romania (-0.2%), while in at least 8 countries it registered more than 5% increase. The slightly positive trend was also reflected in the construction sector’s output. According to EUROSTAT, in Q2 2010 it decreased by -0.26% compared to the same period in 2009 and it rose by 4.2% compared to the previous quarter. However, these results show only a first sign of recovery after a two-year long drop of more than 15%.

These overall positive tendencies are, however, not reflected in the activity of the European cement industry. According to interim financial reports, the 5 biggest cement companies (Cemex, Lafarge, Heidelberg, Holcim and Italcementi), together accounting for some 55% of the European cement capacity in 2008, registered a slump in production in the second quarter of 2010. Lafarge reported a 5% fall in cement sales in Western Europe at constant scope and exchange rates while Italcementi faced a 6.1% drop in overall revenues. Holcim’s European sales volumes decreased 7.7% in Q2 and Heidelberg’s cement and clinker output in WE-Northern Europe fell by 8.9% year on year.

Despite the positive overall economic performance in Europe, cement activity appears to be in line with construction sector prospects for 2010, according to EUROCONSTRUCT¹. In its 2010 outlook for the European construction market, EUROCONSTRUCT projected a downward trend in volumes for the European housing market (-3%), non-residential building (-4%, approx.) and civil engineering (-1.7%). Accordingly, the overall construction output is expected to shrink by an additional 4% in 2010, after an 8.8% decline already suffered in 2009.

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¹ 19 EU Members states are members of EUROCONSTRUCT, including Germany, France, Ireland, Italy, Portugal, Spain and UK. For the complete list visit: www.euroconstruct.eu