Import Trends 2008

Shipment of stone to the United States began to drop in 2007 ( Stone Business July 2008), but every major stone category showed losses at U.S. ports-of-entry last year. As a result, the total value for all stone imports declined for the first time in this century.

A funny thing happened on the way to a down year for stone imports, though; the decline in import tonnage didn’t fall as much as the equivalent value-per-ton in several stone categories from different countries. Some trading partners chose to ship large amounts of stone to the United States, especially in the second half of 2008, and slash the value to keep materials moving.

The result is a continual decline in stone-import figures for the first months of this year. Stone isn’t moving fast into the United States because there’s already more than enough supply from current stocks in stoneyards.

That means that, as business picks up, the U.S. stone industry will burn off plenty of excess inventory first before requiring large growth in imports. The turnaround in U.S. import-stone numbers may well happen after any economic recovery takes hold.

YEAR-END FALL-OFF
When compared to other U.S. industries, the dimensional stone trade often gets tagged with some less-than-appealing descriptions such as chaotic and unsophisticated. Don’t take it personally; the terms denote a market going through plenty of change, and a manufacturing/sales channel that’s hard (if not impossible) to measure accurately.

That’s where the stone-import data for the U.S. market came into play. At least 80 percent of total U.S. dimensional-stone usage involves foreign stone; the import data from the U.S. International Trade Commission and the U.S. Customs Bureau, as a result, offered a reasonable annual snapshot of stone demand and base values.

Source for all charts: U.S. Department of Commerce, U.S. Department of Homeland Security, U.S. International Trade Commission

“Snapshot” offers the chance to plug in some kind of pithy photography reference to describe last year’s U.S. stone market. In one word: blurry.

The total customs value (shortened to value for the rest of this piece) claimed on dimensional-stone arriving in the United States last year came to $2,802,812,180. That’s a 15.6-percent decline from 2007, and a drop below the total stone-import tally for 2005 and 2006 as well.

As granite drove the decade-plus growth in imports until last year, the stone also contributed the most to import declines last year. For worked granite – the cut-and-polished slabs and tiles – import value dropped by 19.2 percent to $1.21 billion. Volume also declined in 2008, with the 1.71 million metric tons of worked granite representing a 9.9-percent drop from the previous year.

There’s more on overall granite imports little later on, but a closer look at some of the quarterly figures show how 2008 became a, well, unpredictable year for determining import trends.

Take last year’s fourth quarter, which started with the worldwide stock-price meltdown and a virtual halt of the credit market for personal and business finance. With stone demand already disappearing with a slow economy earlier in 2008, it follows that shipments would drop dramatically as the year came to a close.

And, the Big Four in granite – Brazil, China, Italy and India – had a worse 2008 fourth quarter in worked-granite tonnage heading to the United States compared with the last three months of 2007. However, for Brazil, the fourth-quarter decline wasn’t as deep as the rest of the year.

In other words, while 2008 was lousy, the last three months saw an uptick in the amount of Brazilian granite hitting U.S. ports. How’d they do that?

It’s simple: Brazilian exporters lowered the price. While the annual average value-per-metric-ton for worked Brazilian granite came to $859.84 last year, the fourth-quarter value averaged $548.42 per metric ton.

In fact, the rest of the major granite exporters showed some fourth-quarter value erosion. None, however, matched the astonishing difference of India; the average per-metric-ton value for Indian worked granite came to $429.79 for all of 2008, but only $180.63 for the fourth quarter.

The import data for the first three months of 2009 show that the great shipment and value spree at the end of last year didn’t continue past New Year’s Day. Average values per-metric-ton for worked granite, for example, are all more than $700 for the major importing countries, and the total tonnage for granite slabs and tiles is barely half of first quarter 2008.

Through a number of circumstances – last year’s increase in dollar strength, shipments arranged before Wall Street took a swan dive, and exporters eager to unload shipments from their docks to U.S.-bound ships – more stone arrived than anyone really needed. It’s not news to plenty of fabricators and distributors looking out at their stoneyards, but there’s a current surplus of dimensional stone.

Unlike butter, flour or other commodities, stone isn’t going to spoil. Slabs and tiles bought at bargain prices can be held indefinitely, so don’t look for any bargain deals.

That surplus also means that U.S. stone-import data, which offered a great look at the progress of the national dimensional-stone industry, will likely be the last lagging indicator of recovery. Any initial growth in stone usage will start using the excess stone already available; by the time import figures start showing any improvement, the overall market will be on the upswing.

In other words, don’t look for stone-import numbers to improve anytime soon. In fact, if you’re looking for indicators of the health of the U.S. dimensional-stone trade, you might quit looking at import data altogether for awhile.