Anil Taneja,
Director, LITOSonline.com
As a new year begins it is also the time for businessmen to make their plans wondering what environment awaits them once the holiday season comes to end. In trying to analyse the different factors that may influence the stone industry it is worthwhile seperating those over which we have no control with those over which there is at least some degree of choice.
FACTORS OVER WHICH WE HAVE NO CONTROL:
Wars
The political factors which can affect the stone industry are potential trade and tariff wars which have made so much news recently. It remains to be seen how much tariffs are actually imposed and whether natural stone will also be included in the list.
Conflicts
The conflicts in Ukraine and the Middle East have also affected the industry by way of higher energy prices and longer shipping times for transport between Asia and Europe.
Who knows how things will work out in 2025?
Interest rates
One positive trend in the economic area is interest rates are finally beginning to decline. Will they keep declining, and by how much, are key questions that will influence business activity in 2025.
Shipping rates
Another positive trend is that shipping rates seem to have stabilised towards end of 2024 at a much lower level than what prevailed in the last 3 years, causing havoc in international trade, tying up working capital apart from causing delays. Will they stay this way?
Rising housing prices
One important factor to consider is that the main reason why housing prices have gone through the roof in so many countries is because there is a genuine, unfulfilled demand, it is not speculation, as in previous booms. Underbuilding of homes during several years is the main culprit. What has been a social reality has now become a polítical problem, and much depends on how the policy makers respond to an increasingly major issue they can no longer ignore. An upswing in home construction will surely benefit the natural stone industry to at least some extent.
Stock market
The stock market, at least in USA, is now in bubble territory, according to a growing number of experts. A serious correction can be nasty effects in unrelated economic activity.
INDUSTRY SPECIFIC FACTORS
Trends:
1. 2024 saw less exhibitors and less visitors to the traditional B to B trade shows in the natural stone industry. But there has been greater presence by stone companies in trade shows and events targeted at interior decorators and architects. This greater attempt to reach out to specifiers is likely to continue in 2025 and beyond.
2. More experimentation in new textures and finishes has now become a more common feature though there is still a long way to go.
3. Serious downsizing in the bigger sized companies took place, those that were previously focused on volume. The focus is now on value addition and most big sized companies all over the world now employ far less people. The smaller companies with modern machinery installations are actually doing better, they are more flexible and have shown to be more innovative.
PROSPECTS FOR 2025 AROUND THE WORLD
1. CHINA
China is now making the transition from being a market for natural stone as a building material for projects to a fast growing market for premium stones used in decoration. With construction activity not expected to improve significantly in 2025 it will be the premium stones that will enjoy ever greater demand in 2025. Chinese stone companies have also shifted rapidly to greater emphasis in design and new applications like furniture. Importers from around the world find it increasingly difficult to get the cheapest prices in China for their natural stone requirements.
2. INDIA
The stone industry in India is also fast evolving in response to the changing circumstances. The businessmen of the export oriented granite industry, located mostly in the south, have essentially taken 2 paths- they have either shifted into producing quartz slabs, or have converted their installations to process and sell imported marblle for the growing local market.
Construction industry is growing all over the country. Rajasthan is where the stone industry is showing growth in new investments and quarrying of new materials, especially quartzite.
Moreover, a huge craftsmanship industry is doing very well and creating jobs.
Imports of marble, mostly as blocks from Turkey, are increasing, but because the number of importers has increased to almost 400, per company imports do not look as impressive. 2025 could see an acceleration of all these trends.
3. SOUTH EAST ASIA
The South East Asian countries are beginning to feel the effect of the slowdown in China. Vietnam may have overinvested in processing capacity, and the industry slowdown is evident. But Indonesia is growing steadily by around 5% and is developing its own processing capacity.
4. EUROPE
For Europe there is a new phenomenon- in 2025 the outlook looks better for South and East European countries, usually struggling, and less dynamism in the West/ North European countries.
The Polish stone industry has been struggling for the last 3 years or so but is likely to get much better in 2025 as the months pass by.
Romania is an interesting market for low priced natural stone. With austerity measures kicking in there are likely to be less public sector projects in 2025 in France. The German economy will be weak in 2025. The construction industry in Spain is doing much better, especially in cities like Madrid and Barcelona and all along the coast. Turkey's massive sized marble industry remains far too big in the current economic environment and most likely quarries and factory owners will continue to struggle to sell their goods.
But it is porcelain that has been used more often in projects and home renovation. Italy can look forward to a more dynamic economic environment.
5 MIDDLE EAST
Iraq has now become the most attractive market. Premium stones continue to find a big market in the luxury homes segment in UAE. Saudi Arabia, after an anaemic 2024, is roaring back again. In general, it is North África where the stone industry will continue to see more development and growth and the countries of North Africa are becoming new suppliers to the international markets.
6. USA
With interest rates now going down as inflation seems under control, and taxes expected to decline under the new administration, many think construction activity will pick up soon. After all, there is an estimated shortage of 3 to 4 million homes. What could hold back the otherwise optimistic outlook is affordability, most people looking for homes are first time buyers and the high prices may become a drag. Overall, the economy remains very strong so normal renovation activity should remain very dynamic. Most likely the number of projects coming into the market should also increase. High cost of money, rising cost of building materials, logistics problems, all these factors held back the builders.
7. LATIN AMERICA
Mexico stone industry has now become very dynamic market with new quarries being opened, investments in machinery taking place, and exports to US increasing. The local market, too, is growing. 2025 should be another good year for the industry.
Brazil is now the biggest player in the stone industry in the world. The foundation is based on an almost unlimited range and supply of quartzites which have become very popular all over the world. The world can't seem to have enough of Taj Mahal quartzite, of which around 12000 cubic metres are quarried every month. But Brasil is now also a significant producer of white marble and a growing exporter. The Brazilian local market has been very dynamic in 2024 but 2025 might start seeing the slowdown of the local market once the projects in construction phase are completed. The currency, real, devalued by around 25% in 2024, good for exports, but interest rates are also creeping up.
Other South American countries, smaller markets, are beginning to show growth too after a decade when demand was stagnant.
THE COMPETITION FROM ARTIFICIAL MATERIALS
1. For quartz the silicosis problem is like a Damocles Sword hanging over it, oversupply is not the only issue it faces. As of now the import statistics for USA show stability in demand of quartz when comparing figures for 2024 with those of 2023. India is now a major supplier as are factories in South East Asia.
2. Porcelain industry. The prices have declined sharply due to the big imbalance between demand and supply. The higher cost of energy in recent times has devastated margins and many companies are in trouble.
3. There is a lot of research going on and surfaces with low or no silica content will likely soon become mainstream. The porcelain industry, too, is highly innovative and constantly coming up with new designs and is far more marketing oriented. Porcelain will continue to be a formidable competitor to natural stone in the applications of decoration and in projects.
THE INDUSTRY IN 2025
Some trends are becoming clear and will consolidate in 2025.
Clearly companies working with stones in the premium segment will do well- demand for Taj Mahal, for travertine, for black stones, onyx and some others, remains strong. Quarry owners of premium materials can command any price they want.
But, for the vast majority of stones, those widely available, the commercial materials, and used mostly as a building material, the situation is very different. Unless the companies develop new applications with these stones the year 2025 will continue to be a difficult year. Those companies, small sized but innovative, reaching out to the specifiers with new textures and finishes, should do relatively better.
CONCLUSION
The transition phase in the natural stone industry is now well under way. It is becoming an industry of several niche segments, there is greater focus on value addition and not just reducing price. There is a realisation that no matter how much one reduces the prices there is always someone else cheaper. Moreover, the artificial materials can be even cheaper than the cheapest stone.
Those people who are now making serious efforts in reaching out to the specifiers are pleasantly surprised to discover that interior designers and architects look upon natural stone in a very positive manner. Its lower carbon footprint is a big plus when compared to the alternatives. But alternative materials have their arguments too.
2025 may well be the year when natural stone in furniture becomes a significant business worthy of full attention and, possibly, become the next motor of growth. In fact, more and more companies are testing out in their respective local markets products like dining tables, coffee tables with high design component, benches, tables and chairs for the garden, etc. Soon these companies will start hitting the international markets. Will 2025 be the year of the turnaround? Because that is when a new age of the natural stone industry begins.
