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1、Q1 2012 infrastructure report issn 2049-0631 published by Business Monitor international Ltd. soutH africa INCLUDES BMIS FORECASTS Business Monitor International 85 Queen Victoria Street London EC4V 4AB UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: Web: http:/ 2011 Business Monitor
2、 International. All rights reserved. All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means g
3、raphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher. DISCLAIMER All information contained in this publication has been researched and compiled from sources bel
4、ieved to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or om
5、issions affecting any part of the publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained. SOUTH AFRICA INFRASTRUCTURE REPORT Q1 2012 INCLUDES
6、10-YEAR INDUSTRY FORECASTS BY BMI Part of BMIs Industry Report the construction of a new international airport serving Durban King Shaka International; and the expansion of Cape Town International Airport. Roads and urban transit systems have received substantial investment. Another transport projec
7、t, which has become synonymous with the World Cup, is the Gautrain the first high- speed railway in Africa. Although not officially or initially a World Cup project, the private concessionaire, Bombela, fast-tracked the construction of the first stretch linking OR Tambo Airport to the suburb of Sand
8、ton in Johannesburg to become operational on June 8 2010. This substantial investment in construction has given the country a significant economic boost. Between 2005 and 2009, construction industry real growth averaged 10.8% year-on-year (y-o-y), outperforming economic growth considerably. In 2009,
9、 when the economy entered recession, the construction industry conversely grew by 7.4%, driven by last minute preparations for the World Cup; indeed, South Africas quick exit from recession was attributed to the industry. This construction industry boom has, in turn, boosted the revenues of South Af
10、ricas largest construction companies. Murray Chinese overcapacity to alleviate some upside pressure. Risks: ? Energy and raw materials costs have moderated in recent months, but remain elevated by historical levels this is a continued threat to producer margins. South Africa Infrastructure Q1 2012 B
11、usiness Monitor International Ltd Page 11 ? Our below consensus growth outlook for China means we see risks to the downside for cement and steel demand; however, we expect building materials demand to remain relatively well- supported. Asia And Latin America Pulling Away Rising per capita income, de
12、mographic growth, urbanisation and industrialisation are the key growth drivers behind Asias building materials consumption story. Indeed, while base effects, Chinas cooling measures and continued weakness in developed markets will likely see a moderation in 2011 cement and steel consumption, demand
13、 growth will remain robust. Across much of Asia and other key emerging markets, notably Brazil, the rate of cement and steel consumption will accelerate. Indeed, we expect Brazil to account for close to 45% of regional cement consumption by 2016, according to our forecasts. Asia And Latin America Ou
14、tperform Regional Cement Consumption Growth (%), Year-On-Year f=BMI Forecast. Source: BMI Research, USGS, UN. Having accounted for the lions share of growth in global cement sales and two-thirds of global steel production in 2010, we expect key Asian markets such as China, India, Indonesia and the P
15、hilippines to further boost the regions share of 2011s global total. Moreover, Asia will be the key driver behind a steady shift in global steel consumption over the coming years - away from developed economies and towards emerging/developing economies. This will see emerging markets account for 73%
16、 of global steel consumption in 2012 (from 61% in 2007); while steel use in the developed world will still be 15% below the 2007 level, according to World Steel Association (WSA) forecasts. South Africa Infrastructure Q1 2012 Business Monitor International Ltd Page 12 Asian Outperformance Basket Of
17、Four Largest Global And Asian Cement Firms By Market Capitalisation (Rebased Jan- 10) Source: BMI Research, Bloomberg Of these markets, Indonesia (Asias third most populous country), the Philippines, Thailand and Vietnam continue to drive the rampant consumption of building materials in the region,
18、with residential construction, in particular, continuing to exert strong upward pressure on cement prices. We expect Indonesia to be a regional outperformer over the next couple of years, having recorded a 14.8% rise in cement sales in H111. Given its size and positive demographic and macroeconomic
19、fundamentals, there is huge growth potential within the market, particularly in the cement sector where sales are soaring and capacity is still insufficient. However, over the short-term, we believe there are risks to this outlook stemming from the countrys weak business environment, as well as exte
20、rnal economic factors. India To Outperform China Although we expect demand to remain relatively robust in China, the raft of monetary tightening measures introduced by the government over the last 18 months should see the growth in Chinese consumption cement and steel consumption outpaced by that of
21、 its fellow giant. That said we still expect demand for building materials in China to hold up relatively well, supported by the governments huge affordable housing programme, as well as extensive infrastructure projects. This view is reflected in our cement consumption forecasts for China, where we
22、 expect growth to moderate significantly from 2011 onwards, but nonetheless average close to 6% growth year-on-year (y-o-y) between 2011 and 2016. South Africa Infrastructure Q1 2012 Business Monitor International Ltd Page 13 In contrast, India should see demand for building materials accelerate fro
23、m 2012 onwards, with demand for steel expected to grow by 4.3% and 7.9% in 2011 and 2012 respectively, according to the WSA. Meanwhile, we expect cement consumption to witness dynamic growth - BMI forecasts y-o-y growth between 2011 and 2016 to average 8.7% - as the countrys insatiable demand for ho
24、using and infrastructure projects drives demand for the material. However, the well-publicised shortcomings within Indias business environment will continue to present significant risks to this outlook. Input Costs Moderating, But Margins Remain Under Pressure Over the last 18 months, inflationary p
25、ressures and the high cost of key raw materials (notably fuel and iron ore) have been, and remain, a key concern for the construction industry. Driven by strong demand in Asia - and perpetuated by the ongoing unrest in the Middle East - rising input costs have put pressure on companies operating mar
26、gins, and in many cases served to offset improving sales growth. These effects have weighed particularly heavily on the building materials industry, given its energy and resource- intensive nature. However, with persistently subdued economic growth in developed states, below-consensus growth in Chin
27、a and no imminent resolution to the eurozone crisis, we remain particularly cautious on regards to industrial commodities. Indeed, with the macroeconomic environment remaining challenging over the coming quarters, we see downside risks for oil prices and industrial metals. That said, energy and raw
28、materials costs nonetheless remain elevated by historical levels, and therefore will likely continue to squeeze producer margins. Moderating But Still Elevated Brent Crude And Newcastle Coal, % Appreciation, Rebased Jan/2010 Source: Bloomberg South Africa Infrastructure Q1 2012 Business Monitor Inte
29、rnational Ltd Page 14 In South East Asia, such issues are accentuated by the constant threat of inflation, which remains a key concern for a number of countries in the region, particularly Indonesia and Vietnam. Although local supply-demand dynamics can drive up prices in a particular market on a sh
30、ort-term basis, factors such as transport and distribution costs, as well as uncertain electricity supply, also remain notable constraints for the building materials sector in many emerging markets. These heightened operating costs can serve to substantially erode positive sales growth. This latter
31、issue is an especially pertinent one in Sub-Saharan Africa (SSA), where the biggest obstacle facing large cement producers is the huge infrastructure deficit. This makes the manufacturing and transport of building materials from country to country - a highly energy-intensive process at the best of t
32、imes - often impossible. While encouraging efforts to ramp up capacity in countries such as Nigeria, Kenya, Angola and Zimbabwe have been seen over recent quarters, the price of key materials such as cement will remain highly vulnerable to price volatility for the foreseeable future. CEE Gives Europ
33、e The Edge Over North America With weak economic data from the US continuing to erode confidence in the countrys construction sector, and a similarly subdued outlook across Europe, the prospects for building materials consumption in these two regions over the coming quarters are muted. However, our
34、outlook for Europe as a whole is slightly more positive than for North America, thanks to recovering demand across Central and Eastern European, and solid growth in the Russian and Turkish markets. Indeed, gradual improvements in a number of these markets has seen overall demand for building materia
35、ls in Europe tick up through 2011, and we expect this dynamic to continue into 2012. US Weighed Down By Economic Woes Holcim: Cement Price/Volume Variances By Region (H110/H111) Source: Holcim We maintain that 2011 will be a turning point for the building material industry in Europe, although this w
36、ill be more pronounced in some markets than others, with sluggish economic growth and a deepening of the eurozone debt crisis in H211 continuing to weigh heavily on confidence in Western European South Africa Infrastructure Q1 2012 Business Monitor International Ltd Page 15 markets. In Western Europ
37、e and the US, high debt burdens and economic uncertainty have led to a string of asset sell offs in the first half of 2011, as firms seek to reduce exposure to these struggling markets. Lafarge is a case in point, having sold off a string of non-core assets in the US and Europe in 2011, as it bids t
38、o reduce its substantial debt pile and focus on emerging markets. Steel: Demand To Grow, With Moderate Price Rises Following a contraction of 6.6% in 2009, apparent steel use (i.e. steel consumption) increased by 15.1% in 2010, according to WSA estimates. It is forecast by the WSA that growth will m
39、oderate in 2011, but still rise by 6.5% to reach an all-time high. This moderation in growth is due to factors such as base effects, as well as Chinas raft of measures aimed at curbing its rampant property and construction sectors. Moreover, much of the growth seen in developed markets in H110 refle
40、cted inventory restocking and stimulus measures that have now unwound. Steel Growth Outlook Steel Consumption, % Change Y-o-Y Source: WSA BMIs Commodities analysts currently forecast steel prices to average US$620/tonne in 2012 (from US$580/tonne in 2011). However, at the time of writing, we noted s
41、ome significant downside risks to these forecasts, chiefly the further deterioration of the global macroeconomic environment in 2012, and we are likely to be downwardly revising our full-year average price for the year. South Africa Infrastructure Q1 2012 Business Monitor International Ltd Page 16 A
42、frica Industry Trend Analysis - Building Materials: Rising Capacity And Competition, But Risks Remain BMI View: High input costs, a lack of adequate infrastructure and political risks will continue to inhibit the production and transportation of building materials across much of the continent, parti
43、cularly in Sub- Saharan Africa (SSA). While a number of countries in SSA are ramping up production capacity (notably Nigeria) the price of key materials, such as cement, will nonetheless remain susceptible to significant (mostly upward) price pressures. The booming demand across much of SSA is in st
44、ark contrast to the continued slump in South Africa, where over-capacity and lower demand continues to hit producers and depress prices. The domestic steel industry meanwhile -with the exception of South Africa and parts of North Africa - remains very much in its infancy. It is import-reliant and la
45、cking the requisite investment and infrastructure to capitalise on the extensive resource wealth. Fragmented Market Limits Export Potential The biggest obstacle facing large cement producers in Africa, particularly in SSA, is the huge infrastructure deficit. This makes the manufacturing and transpor
46、t of building materials from country to country - a highly energy-intensive process at the best of times - often impossible. Indeed, even with good quality infrastructure, the radius within which a standard cement plant is competitive is often no more than 300km. With export potential limited, a fra
47、gmented and localised market has emerged, providing little in the way of scalability for major international producers. A notable example is that of South Africas largest cement producer Pretoria Portland Cement (PPC) which has, despite appearing relatively well-placed to capitalise on the rising ce
48、ment demand in the SSA region, failed to effectively exploit these geographic advantages. With the South African building materials industry continuing to feel the effects of the slump in domestic construction post-World Cup, the lack of exposure to more dynamic markets has hit PPCs sales. Indeed, i
49、n the six months through June 2011, the company has recorded only two months of positive year-on-year (y-o-y) sales growth, with supply significantly outstripping demand. BMI notes that while construction activity should pick up modestly in 2011, excess industry capacity and high input costs (namely electricity prices) will continue to erode profit margins in the domestic market. Extreme Frontiers Come With Strings Attached The alternat