Take a look at Bruce Krasting’s examination of the cement industry worldwide (scroll down: it’s in the middle section):
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.
European, American, and Middle Eastern cement producers are all having a bit of trouble, understandable with the declines in construction. Then comes the interesting part—China’s cement production is 25 times Europe’s or the U. S.’s:
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 2011â€. We shall see. I saw this article on cement pricing in Sichuan province.
In China cement production is a substantial component of GDP. If cement production just remains the same, that sounds like pretty substantial economic headwinds to me, particularly with the decline in appetite for imports from China that we may expect from Europe over the next year.
Here’s an interesting factoid (I’ve mentioned it here before). After energy production and transport, guess which sector is the next greatest producer of greenhouse gases? Yep, that’s right. Cement production.
Why is the magnitude of Chinese cement production so surprising? First, they’re in the middle of the biggest single-lifetime human migration in history. Second, they’re building a lot of ghost cities. In both cases they will use a LOT of cement. OTOH both the US and Europe are stable, well-developed economies.
I’d also guess* that a good deal of the visual pollultion in China is particulate matter from cement kilns.
*Wikipedia down; no guarantees I’m not just making things up.
I wouldn’t be surprised at 5 times or even 10 times. However, we produce a heckuva lot of cement. 25 times is tremendous.
BTW, our cement production is down about 30% from peak. Around 63 million tons. 25 times that is a lot of cement.
Huge migrations are taking place in China. The city of ShenZhen had 350,000 living in it back in 1982. Now the city has ten million people. (H/T Rhazib Khan) Basically, Shenzhen went from nothing to Chicagoland in under 30 years. That is just one city, and that has been repeated over and over again in China during the last 30 years. Not to mention the ghost cities, which I won’t bother to link to again. Florida has experienced tremendous growth over that period, but we’re a whole state, and really a rather large one. Florida’s population growth would be an afterthought in China.
Again, Chinese moving from the countryside to cities has been the biggest migration in human history, and it has happened really damned fast.
Also, I imagine the population density of Shenzhen is much greater than that of Chicagoland, but I’m not going to bother to look it up. I’ll leave that to the interested reader.