The Financial Times reports today that the major cement manufacturers expect cement demand in Europe and The US to be 30% and 44% (respectively) lower than in 2007. A squeeze on infrastructure projects, thanks to exploding government debts and tightening of spending is primarily to blame, they said.
The major producers are clearly focused on developing markets where demand is more organically and necessity driven. They don’t expect the situation to turn in the developed markets until 2012. Even so, given the time to market for a new production line and the spectre of impending CO2 regulations and their potential impact on capacity, we believe that regions in North America can expect to see cement shortages and high prices in the coming years as a result of the major producers business focus being elsewhere.
This is one of the consequences of the industry consolidation that has taken place over the last decade and a half. As the local independent producers have been absorbed by the global producers, the business focus has shifted from one of defining and fulfilling local market needs to one of looking at complete continents as a single market. This is not necessarily good or bad, it just is. The global producers will be investing their available capital in markets they see as having the largest short term potential. The result is that near term opportunities may be created in the Americas and Europe for those who are willing to take a risk and gain first mover advantage. Demand will continue to grow in these markets, and in some cases that demand might be extremely localized.
[...] “Painful Adjustment” in NA and Europe [...]