Demand for cement is a good indicator of activity in the Spanish housing sector, and the latest figures show it has been falling since midway through last year, in keeping with other indicators like home sales, and foreign demand.
Demand cement rose by 5.9% last year, the lowest level in recent years, and all the growth came in the first six months of the year, according to the Spanish Cement Manufacturers’ Association Oficemen.
“The trend was upwards in the first six months of 2019, when it was growing at close to 11%, but demand stagnated in the second half, even with a small decline between July and December of 0.2% in comparison to the same period of 2018,” explains the latest note from the association, reported in the Spanish press.
Cement manufacturers attribute the slowdown to the “almost total freeze” in public works projects, and a slow-down in residential construction. Public works have been frozen due by the lack of a Government and budget in Madrid and regions like Catalonia.
“With public works practically paralysed in our country, the main motor of cement consumption in recent years has been home building,” they say. “However, the latest figures made available by the housing sector appear to dovetail with cement consumption and point towards a slowdown in this subsector.”
Just to put things in perspective, Spain consumed 14.25m tonnes of cement last year, not much above the 11m poured at the trough of the crisis in 2011. That compares to 57m in 2007, when Spain was pouring 66% more cement than Germany, an economy almost three times as large, and more than France, Germany, and Italy combined. Back in that period Spain was pouring so much cement it increased the amount of built-up land on the coast covered in cement by 22% in just six year to the end of 2005 (see Cement wall throttling Spanish coast increases by 22% in six years). By 2012 I could report that Spanish cement producers were going through the worst crisis in their history.
Looking at these numbers Spanish cement makers must be in trouble. Despite a modest recovery in cement consumption since the economy started to recover, they have capacity for 35m tonnes, 3 times actual domestic demand, and also saw exports decline 23% last year. Given the high overheads in the cement business I doubt they are covering fixed costs as an industry.
There are other signs of trouble in the housing sector. The Basque builder Byco has been forced to seek protection from its creditors, which it blames on the “widespread crisis” in the sector.
