Consumption is down for the first time in a decade

The Brazilian cement industry will live in his first year of 2015 retraction in sales and consumption of the product since 2004-the year was rock bottom. The expectation in the industry is that the fall in demand, due to the cooling of the economy of the country, will be in the double-digit level. For some executives, could be between 10% and 12%; for others, you will be able to reach 15%, if the performance of the first half.
Last year, with a slim 1 percent increase in comparison to 2013, was the last of the period of calm that has occurred in this industry from 2005. The sector was boosted by the capitalization of companies in the real estate industry, the credit offer the favourable interest rates, by the expansion of employment and income, in addition to the decrease in the Selic rate, among other factors.
The National Union of the cement industry (SNIC) just disclose the sales data and apparent consumption of December, as well as the total of 2014.
The figures for the period January to June this year are not yet officially known, because the ICNS, that gathers the manufacturers of cement in the country, is only authorised by the Administrative Council for economic Defense (Cade)-in last year's decision-to disclose data of the cement industry with minimal lag of six months.
"The numbers now disclosed by this traditional and important monthly indicator of activity have little to show on the current behavior of the market," he said, in a statement, the SNIC. "The conditions today are totally different from six months ago, because we face a scenario of strong retraction of the economy of the country," says José Otávio de Carvalho, Chief Executive Officer of the entity.
The preliminary figures of December 2014 and indicate that the domestic sales of cement have been of 70.9 million tons, a growth of 1.4% from 2013. Imports in the same period, according to data from the Board of foreign trade (Secex), had 20.4 percent drop, with 817 thousand tons. Apparent consumption amounted to 71.7 million tons, 1 percent expansion last year.
December may have been the last month of increased sales-data from there to here are not known. As the ICNS, were sold by the domestic industry that month 5.2 million tons. This meant high volume of 2.9% as compared to the same month a year before.
"In December 2014, cement sales still showed some growth. Today, however, several other indicators point to a reality absolutely diverse, with sharp deterioration of the construction sector, "says ICNS's note.
In the evaluation of oak, the sector will face this year "a violent drop of sales and consumption". Since 2004, when the hit 35.7 million tons, consumption in the country has doubled, to hit 71.7 million tonnes in 2014. Without reversing the scenario in the short and medium terms, until the end of 2016 the prediction is that the cement plants will face two years of decrease in sales, says the Executive.
Consumption may fall to the level of 60 million tons by the end of 2016. With that, the sector will face high level of idle factories. The production capacity at the beginning of the year was estimated at 90 million tons. About 10 million tons must be thrown on the market yet this year.
According to the Executive, all the foundations that encouraged the expansion of consumption in the country from 2005 were down the drain.
"The current scenario brings a conjunction of economic adjustment launched by the Government with the purpose of car wash operation [of the Federal Police, which investigates tuition payments for contractors in Petrobras ' works contracts]," says Carvalho. The impact points, was drastic for the construction sector (infrastructure), for builders and contractors and contractors, leading to high level of unemployment in this sector.