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After 15% Growth, How The Italian Ceramics Industry Can Cope With The Cost Crisis｜2021 Annual Report
On June 16, Italian time, the ceramic industry federation Confindustria Ceramica conference released the operational data of the Italian ceramics industry in 2021.
According to the latest data, in 2021, the total turnover of the Italian building and sanitary ceramics industry reached 7.5 billion euros. There are 263 companies in operation, employing 26,537 people. The significant increase in the cost of natural gas, raw materials and logistics puts the international competitiveness of the sector and the profitability of companies at risk.
Sanitary ceramics
There are 30 industrial companies producing sanitary ceramics in Italy, 27 of which are located in Cività Castellana. The industry employs 2,663 people, with a total production of 4 million pieces and a total turnover of 368.8 million euros. Its turnover outside the country is 166.4 million euros, or 45% of the total.
Architectural ceramics
There are 131 companies in Italy. In 2021, they will produce 435.3 million square meters, an increase of 8.6% year-on-year. The industry employed 18,528 people. Total sales volume was 455.3 million square meters, an increase of 11.9% year-on-year. Domestic sales exceeded 91 million square meters, up 9.2% year-over-year. And exports reached 364.1 million square meters, an increase of 11.9% year-on-year.
Tile Italia’s total turnover exceeded 6.16 billion euros, an increase of 15.4% year-on-year. Its exports reached 5.2 billion euros, an increase of 15.3% year-on-year, accounting for 86% of total turnover. This compares with an internal turnover of only 967 million euros.
Refractory materials
There are 31 enterprises producing refractory materials, employing 1,697 people and producing 353,500 tons. Its total turnover was 381.6 million euros, an increase of 19.4% year-on-year. The domestic turnover exceeded 176 million euros and the export value exceeded 205 million euros.
Brick and Tile
Italy has 62 companies in the industry, employing 3,000 people. In 2021, it will have a turnover of 500 million euros and a total production of 4.5 million tons, mainly for domestic sales.
Ceramic ware
Italy has 9 companies, 649 employees, 10,600 tons of production, 9,900 tons of finished products sold and a total turnover of 47.2 million euros. Its domestic turnover accounts for 78% of the total and 66% is made in Italy.
The Italian Ceramic Industry Federation Giovanni Savolani noted that in 2021, the Italian ceramic industry grew by more than 15% year-on-year. The health, sustainability and durability of ceramic materials become one of the factors guiding the reconstruction of residential and new buildings in Italy.
In 2022, the first few months show double-digit growth across all markets, but this is accompanied by soaring input costs. Natural gas adds a hefty additional cost of about $900 million per year to the industry, and wooden pallets increase by 224%. It has increased the volume of packaging cartons by 180 percent, while the price of ocean freight has quintupled.
These increased costs ultimately put pressure on margins, yet there are limitations to objectively transferring these to end-use prices.
Even though there is still a huge demand for the market, this has become the biggest crisis in supply for the Italian ceramics industry.
According to Giovanni Savolani, the Italian government has set aside a large amount of resources for households and businesses to cope with high energy prices, but these resources can only reduce the annual growth rate of ceramics by 12 percent.
These measures are said to have regulated only the first two quarters, but the federation needs to be extended until the end of this year.
In terms of structural measures, the forecasted release of 2.2 billion cubic meters of natural gas extracted in Italy, although it is still a drop in the bucket, better than nothing.
However, what is crucial is the timing.
On March 1, 2022, the Italian government adopted the energy decree, which was approved by Parliament on April 27. More than three months have passed and the decree is still pending.
After the conflict between Russia and Ukraine erupted in February, EU countries want to reduce their energy dependence on Russia – about 35 percent of EU gas demand comes from Russia. While the EU has banned coal imports from Russia, sanctions have avoided the oil and gas sectors. Italy has said it would support the ban if the EU were to jointly support a move to impose sanctions on Russian gas.
On June 15, Gazprom informed ENI that Russia had reduced its daily gas supplies to Italy by 15 percent.
ENI said Gazprom did not give a reason for the reduction and did not say how long it would last.
Italian officials say Italy has enough inventory to offset any reduction in Russian gas supplies.
Italian Prime Minister Mario Draghi recently said the Italian government has acted quickly. Diversify gas suppliers by establishing alternatives with Algeria, Angola, Congo, Libya, Egypt, Israel and Mozambique, among others.
ENI has reportedly signed a cooperation agreement with Egyptian energy company EGAS, which will deliver 3 billion cubic meters of LNG to Italy annually.
Italian officials say the country is currently trying to break away from its heavy dependence on Russian gas. Currently, Russian gas accounts for 40% of the country’s total gas imports.
Therefore, at the conference the Italian Ceramic Federation called for a cap on the cost of gas in Europe and stressed the need for firm pragmatism in the decarbonization process.