The New Lead Markets in the International Ceramic Scene
Research | 26/09/2023 | Update: 05/06/2024 | 12 minutes read
Good times for the ceramic sector: the ceramic tile market will increase at a rate of 6.90% annually between 2023 and 2030, going from USD 480 billion in 2023 to USD 720 billion by 2030.
Despite the factors of instability that the sector has had to live with in recent times, global ceramic production is facing a stage of growth. According to the study ‘Ceramic Tile Market Forecast Analysis-Trend 2022-2026’, published by MECS-Acimac, ceramic production will grow under a CAGR of 3.2% in the period 2022-2026. While 18.2 billion square meters were produced in 2021, in 2026 the figure is expected to be close to 21.3 billion.
What are the main factors driving the market?
Rise in World Population
According to the latest United Nations world population report (2022), this would increase by about 2 billion inhabitants before 2050 to approach 9.7 billion.
In the next 35 years, Sub-Saharan Africa will double its population and, much sooner, before the end of 2024, it’s expected that India will relegate China in the ranking of the most populated country on the planet – with more than 1,428 million inhabitants.
In the map below are shown the expected population growth rates for the period 2022-2032 by world regions:
If we focus the analysis just on individual countries, the ranking of population growth expected from 2023 to 2027 would be as follows:
Country Ranking: Population Growth in the next 5 years (2023-2027)
Global Economic Growth Forecast
According to the IMF review of April 2024, in its World Economic Outlook (WEO) report, global growth falled from an estimated 3.5 percent in 2022 to 3.2 percent in 2023 and is forecast to continue at the same level in both 2024 and 2025.
The IMF report shows that economy in India during 2023 grew significantly at a 7.8% rate and expects to grow in 2024 and 2025 at rates of around 6.8% and 6.5% respectively. As for China forecast, after a significant recovery from 3% in 2022 to 5.2% in 2023 , its GDP (Gross Domestic Product) growth is expected to slowdown again the coming years, reaching 4.6% in 2024 and 4.1% in 2025.
In the United States, growth is projected to increase to 2.7 percent in 2024, before slowing to 1.9 percent in 2025, as gradual fiscal tightening and a softening in labor markets slow aggregate demand.
Growth in the euro area is projected to recover from its low rate of an estimated 0.4 percent in 2023, which reflected relatively high exposure to the war in Ukraine, to 0.8 percent in 2024 and 1.5 percent in 2025. Stronger household consumption, as the effects of the shock to energy prices subside and a fall in inflation supports growth in real income, is expected to drive the recovery. Spanish economy will remain stable at around 2.0% growth.
Overview of World Economic Outlook Projections
GROSS DOMESTIC PRODUCT GROWTH RATES
GROSS DOMESTIC PRODUCT GROWTH RATES BY WORLD REGIONS
A snapshot of the sector today
Below is the global tile distribution of production, consumption and export figures in 2022 according to the latest MECS / Centro Studi Acimac survey (Sept 2023):
Asia is commanding the sector in all the market parameters and its production represents 72% of global production, 16,762 Mill. sqm. Its main destination is the domestic market with an import rate of 6.8% and an export rate of 11%.
Europe maintains the historically export-oriented nature of its business with the highest export rate: 76% of its production. This figure represents 35% of total world tile exports. It is worth highlighting the impact that high energy costs and shortages in the supply of certain raw materials – as a consequence of Ukraine-Russia war – have had on product imports, mainly from the Asia region. While domestic demand for ceramic tiles has barely decreased by 6% from 2021 to 2022, production has dropped by an alarming 40%. This is directly related to the fact that global balance in Eurozone territory in 2021 placed imports at levels below 5% and, instead, this figure reached values above 60% in 2022.
As for NAFTA countries and especially the United States, they show a clearly negative balance in their transactions, with an import rate of 43% (71% in the case of the United States).
In the following chart are shown production trends in the period 2020-2022 in the different world areas.
After the pandemic, 2021 showed a peak in world tile production. This boom couldn’t be held in the last years, when a trending slowdown started. The influence of the Russia-Ukraine war on gas, raw material and some critical food costs, led during 2022 and to date to high inflation levels and a general reduction in demand.
Markets far from the consequences of the conflict in the Old Continent and oriented to supply own domestic consumption – low export rates – remained outside the slowdown. Especially positive has been the situation on the African continent in 2022, which has experienced an increase in production of 16%. In the midst of this scenario, NAFTA countries maintain a situation of stability while Central and South America, in spite of having lost part of their productive level, still maintain a figure 15% higher than the one in 2020.
ASIA
Â
Surprisingly, the main driver of the global ceramic industry was the market that responded best in the year with the greatest impact of COVID (2020). Far from this, both production and internal consumption that year registered increases of around 2.8% compared to the previous year, standing at 11,905 Mill. sqm and 11,470 Mill. sqm respectively. Only exports were dragged down by the global situation, with a decrease of 65 Mill. sqm.
Following the general market trend, in 2021 it grew again in all areas after the pandemic year: + 1.6 billion sqm of production, + 1.7 billion sqm of domestic consumption, + 29 million sqm of exports.
No Data Found
In spite of the reduction on internal demand of tiles (-11%), Asia continues clearly commanding the market with 72% of the global production in 2022 (12.2 billion sqm of the 16.7 billion sqm produced worldwide). Main destination of Asian tile manufacturing is the domestic market with an import rate of just 6.8% of their needs: 11,626 Mill. sqm. This demand represents 71% of world tile consumption.
Despite the exportations have been also reduced 4.3% in 2022 they still represent 1,353 Mill. sqm of the 2,770 Mill. sqm exported worlwide that year, or in other words, 49% of global export trading.
GDP by the coming years – estimated around 5.0% – ensure an increase in domestic consumption, which is the main destination of Asian ceramic production.
No Data Found
EUROPEAN UNION
Â
With runaway inflation and the increase of costs derived from the conflict in Ukraine, European production witnessed a 9% slowdown in 2022 (-12% in consumption) and showing a dramatically higher value in the case of Eurozone countries. However, Europe maintains the historically export-oriented nature of its business with the highest export rate: 76% of its production. This figure represents 35% of total world tile exports.
It is worth highlighting the impact that high energy costs and difficulties in the supply of certain raw materials have had on the European domestic market, favoring the importations over local manufactoring.Â
In February 2023, import tariffs on Indian tiles (6.7% to 8.7%) and Turkish tiles (4.8% to 20.9%) have been approved by the European Commission to address the growing import of tiles into European territory.Â
Another important factor that will probably encourage the recovery of domestic consumption of European tiles is the renewal in early 2024 of the tariffs imposed on Chinese products. This protective measure was running until November 2022 and from that moment UE was analyzing the Its application is extended for the next 5 years.
CENTRAL-SOUTH AMERICA
Â
This is the region where the pandemic (2020) had the greatest impact, causing a drastic drop in domestic consumption (18%) and increasing stocks. However, exports kept stiff upper lip during that period.
In the post-pandemic period (2021) the tile industry reemerged with greater momentum than in the rest of the markets, with an increase in domestic consumption of 40%, more than recovering the pre-pandemic situation.
However, the impact of the war in Ukraine on economies around the world was felt especially in certain countries in this region. Beyond the situation of these economies in the midst of a globalÂ
No Data Found
rise in prices, the most worrying aspect is the difficulty found to control and reduce it in the short term.
Venezuela registered the highest annual inflation rate in the world at the end of 2023 (337%) compared with previous year and Argentina, for its part, registered a high-raised 211%. On the other side of the balance, Brazil and Bolivia closed the year with an annual rate of 3.4% and 2.6% respectively. These large differences did not prevent in 2022 a global decrease in tile production (-8%) and, especially, in domestic consumption (-14%).
No Data Found
AFRICA
Â
Away from the effects of the pandemic and the effects derived from the crisis in Ukraine, the African continent has maintained a clear growing trend in domestic demand and productive capacity in the last few years. This has been possible mainly due to the reduced dependence on raw materials from outside its borders, the local availability of gas and the focus on domestic trade.
With a stable and positive gross domestic product variation rate in the last two years – above 4% – the African continent is positioned as the region with the highest growth rate in terms of production and demand for ceramic tiles, 17% and 8 % respectively (2022).
UNITED STATES
Â
According to the figures from the Tile Council of North America, the volume of the domestic production of tiles in the USA was reduced from 87.3 million sqm in 2022 to 83.4 million sqm to 2023, a 4.4% reduction.Â
The internal consumption of tiles has been annually reduced the last two years 1,3% and 7,3% respectively. But the balance import-export show different behaviour: the importations have bee reduced in the last two years 10,5% and exports have seen a jump of 34,3%. In any case, the importations represent the 70,2% of the tile consumption in the USA.
No Data Found
India is the main exporter to the US market with an increase of 42% in the last year respect to 2022 and more than 37 million sqm in 2023, followed by Spain with 32 million sqm.
Who is expected to lead the sector in the coming years?
During the period 2018-2022, it has been the commercial segment that has driven sales of ceramic products, due to their wide use in office buildings, medical centers, schools, hotels, shopping centers, etc. However, in the years ahead the tables will turn, and the residential segment will be the one with the greatest growth. In global terms, an increase in disposable income is expected and a consequent increase in spending on home remodeling, which will increase the consumption of tiles in this segment.
As is usual, the forecasts are conditioned by the particular circumstances of each geographical area.
AFRICA: Fastest-growing region
This is the region with the highest CAGR (Compound Annual Growth Rate) expected for the coming years. A growth ratio of 6.6% is expected in tile consumption and 7.3% in production.
The internal forecasted consumption of tiles will be increased from 1.2 billion square meters per year in 2021 to 1.6 billion by 2026. It represents 13% of the global growth expected for this period.
6Wresearch report supports this estimation, forecasting that African market size is projected to grow, reaching at a CAGR of 5.8% during the forecast period of 2024-2030.
ASIA: Dominating the sector
The Asian region is projected to witness a CAGR of 3.2% Â in the consumption and 3.4% in the production from 2022 to 2026.
These figures allow the Asian ceramic industry to lead world production with an increase of more than 2 billion square meters in the reporting period, representing around 68% of global growth and reaching an annual production level close to 14.2 billion square meters by the end of 2026.
In this scenario, India will became the country with largest-growth in the sector, with a current production over 2.5 billion square meters and an estimated growth rate (CAGR) of 4.1% in the coming years (Imarc Group). In fact, according to National Investment Promotion and Facilitation Agency of India, the construction industry in India is expected to reach $1.4 Tn by 2025, giving impetus to domestic consumption.
Meanwhile, China remains the largest producer in the world with an annual production of around 9 billion square meters and an estimated CAGR of 5% for the coming years.
EUROPE: Slight but sustained recovery
Large production growth rates are not expected in Europe in the coming years. The measures taken by the CE Comission to address the import of tiles from India, Turkey and, recently, from China and to protect the local markets, don’t look like that have been sufficient given the current situation.Â
The EUROCONSTRUCT report published at the end of 2023 forecast a downturn of the domestic consumption during 2024 and a slight recovery during the next two years (1.5% of internal construction growth rate). On the other side, IMF report predicts a stronger household consumption in the coming years.Â
In any case, it seems that the effects of the shock to energy prices subside and a fall in inflation supports growth in real income is expected to drive the recovery.Â
The behavior of the European sector outside the Euro area will even witness a slight recession, with an estimated reduction in production of 700 million square meters annually, largely influenced by the Russia-Ukraine conflict.
On the other hand, the export market is expected to be favored in the coming years by the measures expected to protect North American markets from Asian imports.
CENTRAL-SOUTH AMERICA: On the right path
The different socio-economic factors predict sustained growth of the region’s ceramic industry in the coming years. On the one hand, the main ceramic manufacturing countries in the area have been agile in their fiscal and monetary policies, which has made it possible to predict controlled inflation between 3% and 4.5% for the main producing powers in the coming years (Mexico, Brazil). On the other hand, the GDP growth rate for the region is estimated to be in a stable environment of over 2%.
Another determining factor is the availability of energy at a cost lower than current European costs which, together with lower personnel costs, allows to offer a competitive product.
All this predicts sustained consumption in the domestic market and growth in exports, mainly to the North American market, in the coming years. The estimated figures for the period 2022-2026 are set at a CAGR of 4.6% of production.
UNITED STATES: Seeking a change of trend
Factors like high mortgage rates, inflation, and labor shortages will constrain the recovery of the housing sector. This sector decreased at a 9% rate during 2023.
As TCNA Tile Council of North America informed, to protect domestic market, the 9 U.S. ceramic tile manufacturers which form the Coalition for Fair Trade in Ceramic Tile (representing 90% of US tile production), have filed anti-dumping and countervailing duty petitions with the Federal Government seeking the imposition of substantial tariffs on imports of ceramic tile from India. The industry’s anti-dumping petition seeks the imposition of tariffs estimated between 408% to 828%.
In any case, this is probably not enough to correct the forecast made by the National Association of Home Builders (NAHB) for 2024, according to which the total number of homes built begins current year to decrease by 3.4% to 1.37 million units.