CW Group Global Outlook for 2012 Reaffirmed, 2013 Expected to Reach 3.991 Billion Tons

In its mid-2012 update of global cement volumes, the CW Group lowers its global outlook to 5.3 percent and 5.8 percent for 2012 and 2013, respectively. The mix of regional growth patterns changes with material upgrades and downgrades.

 

ÔÇ£In what has rapidly become an industry benchmark, our latest mid-2012 forecast shows an increased bifurcation in growths across regions. We see prolonged challenges in the developed world, led by more dramatic than anticipated declines in Western Europe. We also lower our view on the Eastern Europe-CIS, Middle East, Latin America and China regions, partially on spill-over effects. This said, we see hope in Africa and, encouragingly, in North America. No doubt we are setting the stage for what we expect to be a global shift in strategic dynamics and emerging corporate champions,ÔÇØ said Robert Madeira, CW Group Managing Director and Head of Research.

 

The latest benchmark Global Cement Volume Forecast Report (GCVFR) by the CW GroupÔÇöthe leading global cement industry advisory and analytics firmÔÇöshows global cement consumption, ex-China, expanding at 3.7 percent in 2012 to reach 1.561 billion tons. The increase is a decline from the four percent consumption volume growth in 2011 when worldwide cement demand ex-China reached 1.494 billion tons.

ÔÇ£The CW Analytics team derives the latest forecast using a combination of country-level, bottom-up statistical, qualitative and external perspectives. We feel this provides a great balance of quantitative rigor combined with practitionersÔÇÖ perspectives that we gather through what we believe to be the global cement sector's most comprehensive, global and extensive information platform, CemWeek,ÔÇØ explained Claudia Stefanoiu, CW Group Senior Analyst and lead on the GCVFR initiative.

Stefanoiu added, ÔÇ£In our mid-year 2012 update, we have also further refined our data baseline models to provide better views on capacity and historical data as well as provide a review of recent market dynamics for the key forecast countries. Many of the data sources that are widely used by the industry were simply of insufficient quality or too erroneous to be relied on. As such, we will continuously maintain and work to refine our in-house data views so that our clients can expect to continue receiving improved baselines as we refine our models and inputs.ÔÇØ

Regional divergence
On a regional basis, economic forces in Western Europe turned from headwinds into gale-force. Cement volumes, even though they looked in late 2011 to stabilize in some core markets, have frayed, with volumes turning negative and plunging in markets across Southern Europe. In the region, only parts of Northern Europe have shown a surprising resilience, with Norway showing exceptionally strong growth. We do not expect this pattern to evolve materially in the near term. To make matters worse, the deterioration is spreading: Eastern Europe and CIS are starting to struggle in many places, albeit with pockets of robust growth, such as Russia and some ex-Soviet states.

Latin America largely remains robust, offset by weakness in Mexico and the Caribbean. Overall, we see the region growing at a slightly slower pace than in our 1H2012 update. Africa remains an exciting cement market, particularly the Sub-Saharan region, and we are revising our forecast upwards by over four percent for 2012, driven by strength across many of the frontier markets, notably in Nigeria.

Asia ex-China also remains strong, and we expect an uptick in volumes compared to our view in 1H2012, accelerating into 2013 and 2014. In particular, several countries in Maritime Southeast Asia are showing strong recoveries, lead by the Philippines and Indonesia with 2012 YoY growth in the double digits. South Asia has faced a bit of a bumpy ride, but we remain positive on the outlook for India as well as Pakistan.

China continues to perform, and some of the worst fears of falling off the cliff seem to have abated. We have lowered our outlook somewhat for the country but believe growth is likely to continue in the near-to-medium term.

On the capacity side, we see only limited countries being able to improve utilization rates in the near-to-medium term. Though the operating environment in some countries will improve relative to their volume troughs, the set of countries that will operate flat out, such as Algeria and Saudi Arabia, is small.

Overall, although we expect slow growth to continue at a global level, the outlook is cloudier than ever, leaving room for a higher degree of uncertainty than usual in our forecast. Competing macroeconomic forces, led by a persistent drag from Europe alongside robust (albeit fraying at the margins) growth in emerging markets, create a tug-of-war between cement market fundamentals and global economic linkages. The CW Group recognizes the challenges ahead, and we advise our clients to more than usual keep revisiting market assumptions and outlook based on changing conditions. With the current market, the biggest error is not in revising forecasts but rather in relying on static models.

About the GCVFR
The benchmark forecast second-half 2012 update to the benchmark Global Cement Volume Forecast Report (GCVFR) by the CW Group, the leading global cement industry advisory and analytics group, provides a unique bottom-up approach to provide a global, regional and country-level 3-year forecast of cement consumption, capacity and utilization rates for 58 individual countries. The authoritative GCVFR is available in subscription hardcopy format for US$1,750 per year for a single user license (plus shipping and handling) including two updates annually (in February and September), providing detailed information on cement consumption, production, utilization and manufacturing capacity.

The report is available directly from the CW Group by contacting sales@cwgrp.com or by visiting our website at: http://www.cwgrp.com/research/20-global-monitor-reports/306032-global-cement-volume-forecast-report-gcvfr.html