Spanish consumption drops 31.3% YoY

Spanish cement consumption slumped 31.3% YoY in the first-quarter of 2012, showing that the sector has entered a second recession that may be worse than the last with rates of unprecedented domestic decline, Spanish cement association Oficemen notes.

First quarter consumption was 3.66Mt compared to 5.322Mt in the same period last year. Production meanwhile, was 4.29Mt in 1Q12 down 24.5% from the 5.683Mt registered the year before. For March alone, consumption was 1.308Mt (compared to 2.06Mt in 2011) and production was 1.523Mt (a decline of 29.6 per cent from 1Q11).

In a statment, Oficemen said: "Thus the per capita cement consumption back to 1966 levels due to the almost total paralysis of the building and public works, which will be further diminished to apply the cuts in the Budget.

Moreover, Oficemen notes that the government's major overhaul of the energy sector creates great uncertainty, since they affect the competitiveness of the Spanish cement industry, its export capacity and the maintenance of stable employment in the sector.

President of Oficemen, Juan Bejar, added:  "We expect the new energy model includes an optimisation system that eliminates the costs not covered concepts related to electricity and allow a new market where companies can obtain long-term prices predictable and competitive power. "

Ratings agency Standard & Poor's today cut Spain two notches to BBB+, warning that the country could have to take on more debt to support its banking sector. It has also placed Spain on negative outlook, meaning there is a risk of further downgrades to come.

S&P predicts the Spanish economy will shrink by 1.5% this year, having previously forecast 0.3% growth. In 2013 it expects the economy to contract 0.5%, having previously predicted 1% growth.