Import Trends 2007: The Hard Truth

After a decade and then some of rising values and volumes, U.S. dimensional-stone imports hit a rough patch in 2007, with most indicators showing less of the material arriving here … and nearly all of it sporting higher prices for distributors, fabricators and end-user clients.
The overall value of dimensional-stone imports last year bested 2006’s totals to set another record, but it’s a hollow achievement. The growth rate of less than one percent lagged behind any adjustment for U.S. inflation, and the weakening dollar abroad also boosted the price tag of most foreign goods, stone included.
The good news – or at least the optimist’s sunny viewpoint – is that those price factors are as volatile as the price charged for gasoline down at the corner pump. And, stone-producing companies may look for ways to increase sales to the United States.

ROCKY ROAD
The era of ultra-cheap foreign dimensional stone is over, at least for the near term. This isn’t exactly breaking news for most in the U.S. side of the trade, and may be a welcome message for those beset by cut-rate competitors. However, it also means an end to the high-powered climb of stone in the United States.
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, offers a consistent annual snapshot of demand and material base value.
In 2007, the picture didn’t develop well at all for the U.S. stone industry.
The total customs value (shortened to value for the rest of this piece) of dimensional-stone imports arriving in the United States last year came to $3,323,023,095. And, yes, that’s a new all-time high, but that’s giving it too much credit.
For one thing, that’s a growth rate of only 0.82 percent from the 2006 total. Last year’s import value for stone also is a marked leveling-off from growth in previous years, such as the 17.4-percent rise from 2005-2006.
The growth also fell short of the $3,412,036,744 estimate for 2007 I made last November in “A Level Market?” , based on historical import data. (And, as promised then, I’ll compare my mid-year import estimates for different types of stone with the actual results from 2007.)
Just because the total for dimensional-stone values stayed relatively the same in 2007, however, doesn’t mean that different types of stone remained the same. Nearly all imported stone went up in value dramatically, and the actual tonnage of stone moving through ports of entry decreased.
The general state of the U.S. economy can be tagged as the culprit, as spending for nearly every big-ticket item – including dimensional stone – decreased from previous years. The slowdown in the construction market, combined with a likely oversupply in the past few years of stone in warehouses and yards, lessened the flow of stone imports.
The value of the wobbly U.S. dollar, however, may have a larger impact on stone imports in the short-term future. The strong euro usually catches the blame for affecting import values, but it’s really one of the lesser problems in the declining purchasing power of the dollar for stone.
The euro grew in value in 2007 – it took $1.47 to equal €1 on Dec. 31, compared to $1.32 on Jan.1. The dollar’s ability to buy from euro-based countries (including Italy, Spain, Portugal and Germany) fell by 11.3 percent during the year.
But there’s Brazil for a large share of granite coming into the United States – and things didn’t change like the euro. It got worse.
While it took only 57 cents U.S. to equal one Brazlian real at the end of last year, that’s a dime more than at the beginning of 2007. It sounds insignificant, but it marked a 21.2-percent drop in the buying power of the U.S. dollar with arguably the country’s largest trading partner in dimensional stone.
Other countries feeding large amounts of stone into the United States also saw their currencies strengthen in 2007 and cut the dollar’s buying power – 19.7 percent for Turkey, and 13.6 percent for India. Even China’s renminbi yuan, unhitched from a constant dollar-value rate in 2005, managed some growth and cut the dollar’s buying power by 7 percent last year.
All of this doesn’t mean that U.S. dimensional-stone prices will shoot up dramatically through 2008. Currencies can fluctuate much faster than the speed of a container of stone coming across an ocean, and a curbing and reduction of international oil prices would buck up the dollar. (The U.S. dollar is the financial unit of trade in the oil business.)
Countries exporting to the United States also may run into excess-capacity problems, with quarries and factories producing large inventories that aren’t moving as fast to U.S. shores (or to China’s, following its Olympics-fueled building boom). Either the supply chain slows down, or producers in exporting countries cut prices to keep stone moving.
The bottom line now is that the import market for dimensional stone is dynamic. And any changes that come, aside from exporting countries adjusting prices to encourage buying, won’t be controllable along the chain from quarry to countertop.

GRANITE
The estimates from mid-year 2007 data pointed to a flat performance on granite value with U.S. imports, along with a drop-off in volume. And that’s what happened.
Imports of all granite total $1.51 billion in 2007, down 2.3 percent from the previous year. As usual, granite’s Big Four – Brazil, China, India and Italy – dominate the trade, accounting for 90.8 percent of imports. Brazil made the biggest impact; with $560.3 million, the country tallies more than one-third of all imported granite value in 2007.
The dimensional-stone industry in the United States uses worked granite – material that’s been finished from quarried boulder into slab or tile format – and the $1.50 billion brought into the country last year marks a 2.2-percent decrease from 2006. (The Big Four countries again capture more than 90 percent of the worked-granite imports.)
The big change in the worked-granite import market came with volume; the 2,253,320 metric tons coming into the United States last year represent a 14.5-percent decline from 2006. Brazil closely tracked the trend, with its 840,139 metric tons in 2007 marking a 14.8-percent drop; India’s 429,014 metric tons show a 30-percent slide from 2006.
The decline wasn’t as severe for the other large traders; China’s worked-granite imports drops 8.6 percent from 2006, while Italy seemed relatively unchanged with only a 1.1-percent decline.
The wide gap in the 2006-2007 worked-granite markets shows the volatility caused by the weak U.S. dollar, especially when it comes to average price per metric ton. Brazil’s $665.51 in 2007 is 20.9-percent higher than the previous year, while India’s $499.74 represents a 33-perecent rise from 2006. China’s $650.91, meanwhile, meant an 18.3-percent rise in 2007.
And Italy? While the $846.55 average per metric ton for worked granite in 2007 ranks far higher than the other major granite importers, it’s also 11.7-percent less than the country’s 2006 average. Add in the increases in the value of the euro, and some of Italy’s stone factories may be showing an indication of a possible trend in 2008 imports: to keep material moving, some exporters will cut prices and make less margin to keep U.S. buyers … well, buying.

MARBLE
The mid-year estimate called for 2007 marble imports to increase in value and volume, creating the one bright spot in U.S. dimensional stone. The year-end data didn’t take any shine off that prediction.
The value of all marble coming into the United States last year came to $640.3 million, or 14.6-percent ahead of 2006. Unlike granite, only half of the marble arriving here is worked … but the semi-finished material also did well.
Worked-marble import values in 2007 totaled $318.6 million, up 19.2 percent from the previous year. As in past years, Italy led the way with $135.6 million, posting a 12.4-percent gain from 2006.
Spain’s $48 million in worked-marble import values ran a distant second, gaining 10.4 from 2006. The biggest gainers, though, are China, with $44.6 million (up 43.6 percent) and Turkey’s $25.1 million (up 55.4 percent).
The 292,448 metric tons of marble entering the United States last year is an 8.1-percent gain from 2006 – a modest increase when compared to previous years, but stellar for 2007. Italy shipped in 83,494 metric tons – a 5.9-percent decrease from 2006 – while China moved into second place with 57,946 tons, besting its 2006 effort by 33.9 percent.
Spain’s 48,688 metric tons of worked-marble imports represent a 2.7-percent drop, while Turkey ups its total ot 34,865 metric tons, or a 58.4-percent increase.
In average value per metric ton, Italy gains top-dollar status in 2007 at $1,624.16, up 19.4 percent from 2006. Spain also posts a double-digit increase of 13.4 percent at $986.41. China’s $770.07 in 2007 is only 7.2 percent ahead of the previous year, while Turkey – despite a strong position by the new lira against the U.S. dollar – marks a 1.8-percent decline at $721.52

TRAVERTINE
Sometimes predictions miss the mark. Using data from mid-year 2007, I pegged a decline in the import volume of travertine, but thought the value of the material would increase marginally. As it turned out, values went down as well.
The $539.2-million import value of travertine entering the United States last year represents a 1.4-percent drop from 2006. The clear leader in travertine – Turkey – accounts for 63.5 percent of the total value, and its $347.4 million is only 0.8-percent less than 2006. Mexico’s $101.3 million represents a 1.8-percent drop. Italy’s share shrinks again to $38.5 million – down 14.7 percent – while Peru’s $23.9 million is up 7.9 percent from 2006.
For the first time in more than a decade, however, Turkey fails to top itself in annual import volume of travertine; the 641,902 metric tons at U.S. ports-of-entry in 2007 are a 7.6-percent drop from the previous year. The 41,940 metric tons from Italy last year are a 28.4-percent slide from 2006, and Peru marks a 10.3-percent decline at 27,391 metric tons.
Mexico’s 126,001 metric tons, however, are a robust 8.7-percent hike from 2006 levels. The average import value per metric ton for Mexican travertine also drops 9.7 percent in 2007 to $804.55. (The U.S. dollar also gains 1 percent in buying power against the Mexican peso in 2007.)
Turkey’s average import value per metric ton, meanwhile, increases 7.4 percent in 2007 to $533.57. Italy’s average increases 19.1 percent to $918.61, while Peru goes up 20.2 percent from 2006 to $875.85. (The U.S. dollar meanwhile, lost 3 percent in buying power against the Peruvian nuevo sol.)

SLATE
The mid-term report on U.S. imports of slate last year didn’t look promising. The prediction of a 4-percent to 5-percent drop at the end of 2007, unfortunately, proved optimistic.
The $117.9 million in import values for slate last year shows a 9.9-percent decline from 2006. The two leaders in the material – China and India – finish with a near-equal share, with $47.7 million and $47.2 million, respectively.
However, that’s also a 11.1-percent drop for China and a 9.7-percent decline for India. China’s loss is surprising, given that it was keeping pace in mid-year with its performance in 2006.

OTHER CALCAREOUS
If it’s calcareous and not classified as marble or travertine – materials such as limestone and alabaster – it falls into this category. The mid-year prediction called for an up year, and the final totals are better than expected.
The U.S. import value of other calcareous stone in 2007 totals $223.7 million, or an 8.5-percent increase from the previous year. Italy leads the way with $40.8 million – up 5.1 percent from 2006 – but Spain’s $27.4 million represents a 22.7-percent decline, and a serious drop from the country’s 2005 import value of $42.4 million in the category.
Other countries show healthy increases from 2006 values in 2007, such as Israel’s $22.3 million (18.5 percent), Turkey’s $17.6 million (16.5 percent), and China’s $17.5 million (24.4 percent). One country on a hot growth curve is Lebanon, going from $2.4 million in 2005 to $5.5 million in 2006 – and jumping to $13.5 million in 2007.

OTHER STONE
The catchall category for the rest of the dimensional stone coming to the United States appeared to be heading for a down 2007, according to mid-year import data. Import values indeed dropped during the year, but at less than the rate predicted.
The value of other-stone imports dropped by 5.4 percent in 2007 to $287.4 million. Brazil regains its top position from India in 2007 in a battle of which country lost less value; Brazil’s $71.7 million shows a 4.9-percent drop from 2006, while India’s $69.9 million marks a 7.4-percent decline.
Of the market leaders, China shows the largest increase in 2007, with its $37.1 million showing a 14.1-percent gain from the previous year; Italy’s $36.6 million in 2007 is a 7.9-percent drop from 2006 Canada continues to make small-but sure progress annually ; the $31.8 million in 2007 values is a 4.4-percent gain from the previous year.
Data for this article, and for accompanying charts, is derived from information reported by the U.S. Department of Commerce, the U.S. Treasury and the U.S. International Trade Commission. All analysis is made using comparable data. “Cut /slab” data excludes crude/roughly trimmed stone comprised of marble/travertine, granite or other categories where volume measurement is in cubic meters instead of metric tons. Marble/travertine crude/roughly trimmed stone data is not included in value summaries, since the two stones are not delineated in the Harmonized Tariff Schedule of the United States (2002) (Revision 2).