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RECESSION

Cement consumption falls to levels last seen almost half a century ago

The sector has shed 28 percent of jobs since the property bubble burst in 2008

Plunging consumption of cement has come to symbolize Spain's sad and painful transition from a surging economy based on a massive decade-long property boom, which generated widespread corruption and came to an end in 2008, leaving the real-estate market in a slump ever since.

With the country locked in its second recession in three years, and the austerity drive seeing spending on public works slashed, cement consumption in the first nine months of the year has fallen to its lowest level in 50 years. That is not to mention the fact that with an estimated one million housing units built up over the boom period still unsold, the home-building sector has virtually collapsed.

According to figures released earlier this week by the industry association Oficemen, in the period January-September only 11.6 million metric tonnes of cement were sold, down 34 percent from the same period a year earlier. The association believes consumption for the full year will amount to 13 million metric tons, the lowest figure since 1967.

The amount of cement sold last year was 20 million tons, not even half of the levels seen during the record years of 2006 and 2007, when construction absorbed almost 56 million tons in both years.

The crisis has seen the number of people employed in the sector fall from 7,252 at the end of 2007 to 5,167 as of August of this year. Plants such as Holcim's in Jaén and Granada and Cemex's in Vilanova i la Geltrú in Barcelona province have closed down, while production has been halted at others. Portland Valderivas, which lost 327 million euros last year, has cut jobs and has decided to concentrate production in its Catalan plants in Monjos and Vallcarca, which will operate alternatively 10 and two months a year.

A two-digit fall in output in 2013 would be cataclysmic for the industry"

Oficemen says the industry is suffering the "worst crisis in its history." "For a country such as Spain, reasonable consumption would be between 26 and 30 million metric tons a year, a level similar to that of neighboring countries such as Italy, and what we are seeing is about half of that," says Oficemen's finance manager and head of research, Ramón Ibáñez.

Consumption in September alone was barely over one million tons, a figure that Oficemen says is equivalent to the average production capacity of the 35 cement plants that exist in the country.

With the volume of public works at approximately half of the levels of last year and housing starts of under 80,000 last year, the outlook is bleak.

Far from exports taking up some of the slack, overseas shipments of cement have fallen to six million tons a year from 13 million in 1983.

"A further two-digit fall in [cement production] in 2013 would put us in a situation that could only be classified as cataclysmic for the Spanish cement industry," says Oficemen's general manager, Aniceto Zaragoza.

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