Italy: Old World, New Reality?

September 6, 2004

Times have been better for the country that created and defined the dimensional-stone market in marble, granite and other varieties. Looking at the production figures for Italy in the past few years, it’s hard to find bright spots among the diminishing volumes and values of its stone exports.
The first part of this year, however, shows some improvements for Italian stone. Although it’s too early to call it a trend or just a one-time bump, the figures are good news for a sector of the market that, despite the recent dismal talk, is still the crossroads of the worldwide stone market.
And, there’s one other thing: When it comes to the import/export market, Italy has a very good friend in the United States.

HASTY IN NUMBERS?
The woes of the Italian stone industry aren’t gossip items planted in the market by aggressive rival nations. Much of the concern comes from the Italian trade itself, in reports produced by the industry trade group Internazionale Marmi e Macchine (IMM) Carrara S.p.A. It released “Stone Sector 2003” by Silvana Napoli (the main source for the international data that follows), as well as industry updates noting the decline in the country’s stone trade.
Those import/export numbers can be taken, in a quick study, as proof of Italy’s continuing decline. However, don’t be too quick about all that data.
Take, for example, the raw-tonnage production of dimensional stone worldwide in the past five years. Italy fails to match the growth of other countries, with its estimated 10-million tons in 2003 showing a five-percent decline from 1999. Compared to other countries last year, Italy places third. (China is first with 18.6-million tons, while India is second with 11.2-million tons.)
Is Italy likely to drop of the top five producers of raw stone anytime soon? Not likely. Its only major rival at the moment is Iran, which also produced an estimated 10-million tons in 2003; the next-closest country is Spain at 7.7 million tons. Even Turkey, with its phenomenal growth in the international stone market, would need an even-larger push in production expansion to grow from its 6.2 million tons last year.
In Italy, quarry numbers are literally half the story. Look for a native Italian stone in the international market, and it’s almost always going to be marble. The idea of Italy as the crossroads of stone is more than a catchy phrase; the true power of the country’s stone industry is in worked materials of polished slabs and other ready-to-fabricate items.
Even when including worked materials, however, Italy compares poorly at first glance. The 1.75 million tons of raw and finished marble exported last year, for example, ranks second to Turkey’s 1.9 million tons – the first time Italy’s been second in the category. Italy also exports less than in past years; the 2003 total is a 17.6-percent drop from 2001 levels.
Nobody else is going to be challenging Italy’s position in the near future, though. The closest competitor is Spain, and its 776,270 tons of raw/finished marble exports isn’t even half of Italy’s. Greece, the next-highest marble exporter, is farther back at 382,360 tons.
Italy ceded the lead in raw/finished granite exports to China some time ago, and dropped to third behind India at the turn of the century. Italy’s 1.2 million tons in exports is far behind China’s 5.4 million tons and India’s 2.3 million tons in 2003 – but it’s a long way down the list to find fourth-place South Africa at 733,620 tons.

A FRIEND OVERSEAS
Ask anyone importing stone (or stone machinery, for that matter) from Italy to the United States about sales problems, and they’ll cite the strength of the Euro against the U.S. dollar. Paradoxically, it’s the same predicament Italy finds itself in with its fellow members of the European Union.
While their currency continues to hammer the U.S. dollar, the economies of the EU haven’t favored large-scale construction, business expansion and other conditions favorable to stone use. The value of Italian worked granite exported to EU countries in 2003, for example, totaled €304.9 million – some 22 percent less than exported in 2001. The €147 million in worked Italian marble exported to EU members last year, meanwhile, represented a 23-percent decline from 2001 levels.
Meanwhile, the value of Italian granite and marble exports also dipped in the past two years in other parts of the world, but Italy found at least one friendly area for its granite: North America, and the United States in particular.
Despite the continual weakening of the U.S. dollar by the Euro, the value of worked granite heading across the Atlantic increased in the past few years. The €234 million in exports to North America last year marked a 12.5-percent rise in value from 2001 levels. (The overwhelming share of that went to the United States, which accounts for 90 percent to 95 percent of Italian stone imports to this continent.)
The actual tonnage sent to North America, however, reflects the price deflation in today’s stone market. North America received 237,738 tons of finished Italian granite last year – and that’s 35.6-percent more in volume than arrived in 2001.
Marble shipments to North America from Italy, meanwhile, suffered as imports from Turkey – mainly in travertine – gained wide acceptance in the U.S. market. The 234,640 tons of Italian marble shipped to North America last year represented a two-year decline of 20 percent, and 2003’s value of €258 million showed a 26-percent drop from 2001.

HOPEFUL SIGN?
This year, however, Italy’s marble and granite exports may be on the rise, both in tonnage and value. The news looks good from figures released by the Italian state agency Istituto Nazionale di Statistica (Istat) and processed by IMM.
In this year’s first quarter, overall processed granite exports totalled 185,126 tons, up 10.2 percent from the first three months of 2003. While values didn’t rise in proportion – the €148 million is only an increase of 5.2 percent – it’s a smaller ratio of tonnage to value than in past years.
Processed marble, while not posting any significant gains, at least held its own for Italy in 2004’s first quarter. The 237,676 tons exported worldwide represented a 1.2-percent increase from first quarter 2003, and the €237 million in value offered only a tiny fraction –less than one-quarter of one percent – of decline from the first three months of 2003.
Some of the positive results come from the EU, where first-quarter volumes and value of processed-marble increased by 17 percent and 15 percent, respectively, from first-quarter 2004. North America also remains strong in buying Italian processed marble; 45 percent of all first-quarter 2004 stone production in Tuscany, valued at €47 million, came directly to the United States.
A sustained recovery, however, remains dependent on several factors. Demand needs to remain strong, especially in EU countries and possibly less so here, where the weakened U.S. dollar is a target for non-Euro countries such as China, Turkey and Brazil.
The challenge in the long run, though, is possibly China – not so much for sheer export volume and lower prices, but in vying with Italy for being the waypoint for stone. Aside from quarrying its own vast resources of stone, China is also becoming a center for processing marble and granite for domestic consumption and export. It imported 3.3 million tons of raw stone in 2003 – or 29.8 percent of all raw stone on the worldwide market last year.
For Italy right now, however, it’s so far, so good. The start of the year, can give the Italian stone trade something it hasn’t had in a while: something good to say.