Romania’s construction materials market stabilized at low level in 2013, paralleling the sluggish pace of investments in large infrastructure projects and buildings construction. Producers such as Siceram, Saint-Gobain, Austrotherm, and Adeplast reported shrinking markets and lower year on year profits. Residential construction and civil engineering works inched up by 2.1% year on year and 0.3% year on year respectively from January to November 2013. The activity in the construction sector was mainly sustained by capital repairs and maintenance works, which recorded a double-digit annual increase in January–November, while new constructions declined by 9.6% year on year over the same period.

Despite an encouraging performance in the first quarter, sales of cement dropped by 3.5% year on year in volume terms in January–September 2013, affected by the diminishing demand from non-residential and civil engineering constructions.

The brick market did not show signs of recovery in 2013, as the lack of large investor interest and scarce financing options for individual investors reflected in the poor performance of buildings construction. Even though some improvement on the residential segment was recorded the first part of the year, in H2FY13 there were no new projects, according to market players.

Key Points:

• Companies discussed include, among others, Ceramica Iasi, Siceram, Saint-Gobain Construction Products, Cemacom, and Adeplast. The latter has announced plans to expand into Kuwait and focus on exports to Bulgaria, Moldova, Ukraine, Hungary, Austria, Germany, and Lebanon.

• The situation of construction materials market is unlikely to improve significantly in the short run, considering that there are little grounds to support growth in the construction sector, whose recovery currently relies mostly on civil engineering works financed from national and EU budgets.

• In 2014 construction materials producers will face rising distribution costs and taxes in addition to the demand-side deterrents. Construction material producers’ prices increased by 1.2% year on year in January–November and the industry association expects a further 8%–10% year on year rise in 2014. Under the current market circumstances, the increases are mostly absorbed by manufacturers and do not reflect in selling prices, thus denting into the players’ financials.