Spain to see fifth consecutive annual double-digit fall in demand

Spanish cement association Oficemen expects consumption to reduce by 33 per cent in 2012  per cent in 2013, the fifth double-digit decline in a row. This will take annual demand to a little more than 13Mt, light years away from the 56Mt consumed in 2007, the association highlighted.

For the first 11 months of 2012, consumption reached 12.74Mt, down 33.8 per cent YoY, compared to the
19.23Mt achieved in the same period of last year, data from Oficemen shows. Production, meanwhile, totalled 14.9Mt in the same period, down 28.5 per cent YoY.

"A year ago we estimate that in 2012 cement consumption decrease by 12 per cent, but the evolution of the market has been infinitely worse than expected. The new entry into recession in the Spanish economy has led to a dramatic decline in spending that has completely paralyzed investment in public works. At the same time, the stock of unsold new homes has remained at levels similar to those of 2009, halting the construction of new properties, "said the president of Oficemen, Juan Béjar, during the press conference held today by the Association. "Unfortunately, the latest macroeconomic forecasts suggest that this situation will not improve in the short to medium term," he added.

Oficemen expects that the demand will shrink by 20% in 2013. This forecast domestic demand would place around 11Mt  and per capita consumption only 235kg per inhabitant, a level not seen since 1962 to find a similar data.

Compounding the issue, is an expected increase of 16 per cent in electricity bills for 2013 referred to in the Bill for fiscal and energy sustainability, which is about to be passed in Congress. Electricity consumption for the cement industry represents 18 per cent of total production costs and 32 per cent of the variables, an additional hurdle that seriously undermines the competitiveness of the industry compared to other neighbouring countries, Oficemen stated.

 "By approving the bill in its current form, it would be the last straw for the competitiveness of our products in international markets," said Bejar.

Oficemen has made an appeal to the Government to accept amendments to the draft Law which, the association says, is the only way the cement industry can access affordable electrical costs and allow it to maintain its competitiveness and export capacity. This would ensure the survival of the domestic industry and slow the number of job cuts facing the sector which, since 2007, has been forced to adjust the workforce by 34 per cent, Béjar added.