AUSTRALIA: Building Materials

Thanks largely to its use in civil and engineering construction, domestic production levels of cement throughout Australia continue to hold up despite weak building conditions, the latest data shows.

Figures from the Australian Bureau of Statistics (ABS) show that at 2.565 million tonnes, the overall volume of Portland cement produced in Australia throughout the June quarter was well up on the March quarter and was up by 12.85 per cent compared to the 2.273 million tonnes produced last year.

Production volumes of Portland Cement Clinker, too, while being down on the March quarter and slightly below recent historic standards, have basically held firm on a year-on-year basis.

The same cannot be said, however, for bricks or tiles.

The number of clay bricks for structural purposes produced during the three months to June (293 million) is down by almost one quarter year on year, while that of both clay bricks for non-structural purposes and concrete bricks and pavers is also well down.

Tile production was similarly hit. Compared with June last year, the overall value of terracotta and concrete roofing tiles produced during the June quarter was down by 22 per cent.

Meanwhile, production volumes of both plasterboard and pre-mix concrete remain flat.

While the quarterly ABS data provides a detail level only of production levels, the latest indications are that overall levels of activity in the manufacturing of construction materials remains in decline. The latest Performance of Manufacturing Index (PMI) showed that volumes of production in building and construction materials shrank again in July, the third such monthly contraction in a row.

Moreover, the strength of cement production reflects its uses in the relatively healthy civil construction sector. Weakness in bricks and tiles, by contrast, reflects the exposure of manufacturers of these products to the weak building cycle.

Going forward, given expectations of strength in civil construction but a gloomy outlook for housing and building, it is likely that demand for cement will remain strong relative to that for materials that are predominantly used in building and housing.