The big Swiss cement company Holcim announced a charge to assets as a result of a write down of fixed assets.
Here’s the headline and a look at Holcim’s stock performance.
Note that the stock got clipped for a 1/3 of it value about 8 months ago.
The large cement producers from France and Germany also had their stocks whacked at about the same time.
Actually there is not much good news for the cement boys anywhere:
A question for readers: How big is China when it comes to cement? Keep in mind that the EU and the USA have GDPs of about $15T apiece. China is much smaller and has a GDP closer to $6T. Knowing that, what’s your guess on how China stacks up in the world of cement? I would have thought that China was as big as the US or EU. The economy is smaller, but they are building so much, my guess was about equal.
Wrong. wrong. wrong. I must admit, I was blown away by this:
China is 25 Xs larger than either the US or EU! When it comes to cement, forget the rest of the world and focus on what is happening in the country with a 54% market share.
China’s cement production has been on a tear for years. But it’s slowing down. The production for 2011 will come in at 1.88mm metric tones, an increase of only 6% over 2010 (the slowest in 15 years). The Cement Association of China is forecasting that 2012 total production will be “about the same as 2011”. We shall see. I saw this article on cement pricing in Sichuan province.
Since 2004 China’ GDP has doubled. So has its cement production. That’s not a coincidence. The forecast for unchanged production in 2012 is inconsistent with high growth in GDP. What does zero growth in cement production translate into Chinese economic growth? My guess is that 4% GDP would be a good result. That would be well below stall speed for China.