GLOBAL ECONOMIC ENVIRONMENT.
RUSSIA – The economy has stabilised and the currency rouble is stable. Imports of low priced stone should increase slightly in this market which has now become price sensitive. There will also possibly be more exclusive luxury projects than in last 4 years.
MIDDLE EAST – Except for Dubai and Qatar where there are some projects (related to specific events) no change in demand is foreseen even if the price of oil increases moderately.
NORTH AFRICA – Stable. Some increase in demand will take place in Egypt due to construction of new capital.
SUB-SAHARA AFRICA – Stable, especially in the east of the continent. But the markets remain extremely price-sensitive.
LATIN AMERICA – Stable, with small increase in demand. Argentine should be better, as also the countries of Central America. Brazil will finally come out of its severe crisis though it is unclear whether the local market will improve in 2018. Demand in Mexico dropped sharply unexpectedly in second half of 2017 but will probably recover.
INDIA – Some improvement in demand as construction activity gradually picks up all over the country. But the booming construction activity that everyone has been impatiently waiting for, will still be nowhere in sight.
FAR EAST – Almost all countries of the region are expected to grow economically between 4 to 5%, there should be some increase in demand for building materials in all countries. China used to be the almost monopoly supplier of stone, that is no longer so.
CHINA – The local market will not be like some years ago, but neither will it collapse. For block exporters China will remain the market where they simply have to be present. Chinese stone exporters no longer dominate the low priced end of the market, but they are still present in a big way.
INDUSTRY COMPETITIVE ENVIRONMENT
3. Apart from kitchen counter-tops where porcelain will compete with fiercely for market share with quartz and not just granite, artificial stone has also entered the market segment of exterior floorings, exterior facades and decoration.
4. Artificial stone companies have invested seriously in marketing in the social networks and are cleverly using them not just to create brand, to inform of its possibilities and promote the products, but also educate the installers.
5. Greater competition among manufacturers of different artificial stones can already be observed in the sense of criticism they make of each other. Probably during 2018 a decline in the prices of artificial stone will take place due to imbalance between supply and demand.
6. During the long crisis in European countries many stone installers have retired, others found opportunities in other industries. There is currently a serious shortage of qualified workers in the stone industry practically all over Europe, even in Poland.
7. A greater effort in reaching out to architects has been made by some companies of the natural stone industry. Some companies are now diversifying into cut to size and incorporating greater element of design, experimenting with new finishes and textures, offering to do projects to architects.
8. Some companies have started diversifying their business towards new products such as furniture and dining tables, and offer new products to new type of buyers. However, in general, the philosophy remains unchanged for most of the industry – natural stone companies offer products, while artificial stone manufacturers offer solutions. There is still no sense of urgency in articulating to the customer his/her question – “Why should I use natural stone?” To the stonemason the answer is so obvious it needs no explanation.
9. One of the reasons why wholesalers working in competitive markets and with greater purchasing capacity have switched to artificial stone is they make more money working with higher priced stone than with cheaper stone. They are usually reluctant to admit this, but when they buy cheap semi-finished stone like slabs they end up re-selling it also at a low price (they, too, have competition) and, therefore, their margins are lower. Their margin per sqm sold is higher when they deal with higher priced products.
10. The Chinese presence in the segment of cheap natural stone in international markets has been falling dramatically- a phenomenon not much commented within the industry. Hundreds of quarries and factories in China have been closed down by the authorities due to environmental concerns, but for the foreign buyer there is less reliability in supply. In quartz, often poor quality and very low prices from China and elsewhere have done damage to the image of quartz as a product. Currently only the major brand names in quartz seem to have reasonable margins. Generally speaking, though, no decline in demand for quartz has been observed till now.
CONCLUSIONS
4. In the medium term there is likely to be some equilibrium between natural stone and artificial stone. The new products are here to stay even after the novelty value is over, and they will soon be getting immersed in the inevitable price wars. Both natural and artificial stone will have their promoters, their specialised market segments and even applications. 2018 looks like being a very interesting year of transition in this evolutionary process.