Harold A Taylor, Jr
DIMENSION STONE ADVOCATE NEWS
Detailed Outlook for 2005 Issue No. 20 April – May 2005
This outlook is based on structured, in-depth conversations with well-placed industry observers, some preliminary statistics, and the professional judgment of the Publisher/Editor, Harold A. Taylor.
General Outlook for 2005: The general outlook for dimension stone looks quite positive for 2005 as does the outlook for indium. The outlook for bismuth and graphite are neutral to slightly positive. The steel outlook is positive. The demand index showed that overall 2004 U.S. dimension stone sales were up 26% from 2003. Even those that have been no growth or slow growth will be up in 2005: domestic granite monuments up 8%, domestic slate up 5%, Indiana limestone up 4%, and sandstone up a percent or so. Granite countertop sales in 2005 should be up 15%-25% from 2004, according to our observers. Standard granite and marble tile sales in 2005 will be up a few percent, but specialty tile (premium stones, different or nonpolished finishes) sales up much more. To put this in perspective, imports accounted for over 82% and domestic granite monuments-Indiana limestone-domestic slate accounted for less than 7% of the 2003 Overall Production-Demand Index.
Residential dimension stone sales in 2004 continued very strong; our sources are divided on 2005: probably 2005 sales will be strong but not quite as strong as 2004. Stone sales in 2004 for expensive residences were strong, as were sales for cheap residences; sales for the middle were squeezed. Then there are those Fed interest rate hikes. Our observers are unanimous: the series of Fed interest rate hikes have not weakened sales. One observer thinks that continuing the interest rate hikes will merely switch his market from new home building to remodeling, with no loss of sales. Getting to be a long-term phenomenon, Chinese imports continue to pressure parts of the U.S. granite monument and tile and slate markets. A newer development is that many U.S. firms are subcontracting stone finishing and related work to China.
Outlook for granite memorials and monuments: This includes mausoleums and other stone funeral products. Sales of high-end monuments such as those with non-polished finishes and intricate designs continued to be very strong, as they have been for some years now. Sales of domestic monumental granite in 2004 were up around 5% from 2003, and 2005 is likely to be up 8% over 2004. A growing volume of imports of finished granite monuments, from a number of nations, will keep sales and prices under continuing pressure.
U.S. import statistics show that finished monument imports totalled $22.1 million in 2004, up substantially over $17.4 million in 2003 and $17.0 million in 2002. The biggest gainers were Italy, China, and India, in that order.
Outlook for granite building stone and countertops: This includes veneer, cut-to-size, and ashlar (kitchen countertops, see below). Sales of granite building stone in 2004 was about level with 2003. Sales in 2005 will likely be a few percent over 2004. The best 2005 outlook of all is for granite kitchen countertops, where 2005 sales are likely to be up 20% to 30% over a strong 2004; 2004 was up roughly 25%-35% over 2003: there was substantial variation among the observers.
Outlook for dimension stone tile: This includes mostly granite and marble, almost all imported but some domestic, mostly polished but some with other finishes, some of limestone and slate, of various sizes and thicknesses, and various colors and patterns. The index showed that sales in 2004 for granite and marble tile were up around 30% from 2003. The observers indicate this is high, especially for standard and domestic tiles, which had almost no 2004 sales growth from 2003 and are all highly-competitive and mass-produced items. Imported specialty tiles are a different story. Tile sales in 2005 will be at least as strong as in 2004.
Outlook for Indiana limestone: This is the major U.S. limestone and is made into products including cut-to-size panels or veneer, lintels, sills, stair treads, ashlar, and cubic stock. Sales in 2004 were down 1%-2% from 2003. Sales in 2005 will be up 3%-4% from 2004.
Outlook for worked slate (including roofing slate): These products comes in a variety of sizes and a number of colors; the major colors are gray-black, purple, green, variegated and red. Sales of domestic slate in 2004 were about the same as 2003. Sales in 2005 are likely to be up about 5% from 2004.
Outlook for other dimension stone: This would include other domestic limestone, bluestone, sandstone, and marble (not tile). Sales in 2004 were down 2% from 2003. Sales in 2005 are likely to be about the same as 2004.
Statistical Parameters: (a) Sales related. The Overall Dimension Stone Production-Demand Index was 100 for 1997, 126 for 1998, 144 for 1999, 164 for 2000, 177 for 2001, 189 for 2002, 221 for 2003, and 278 for 2004 (final).
The Demand Index for Granite Countertops was 100 in 1997, 143 in 1998, 182 in 1999, 263 in 2000, 290 in 2001, 354 in 2002, 452 in 2003, and 715 in 2004 (final). The Demand Index for Granite and Marble Tile was 100 in 1997, 117 in 1998, 123 in 1999, 145 in 2000, 153 in 2001, 169 in 2002, 199 in 2003, and 260 in 2004 (final).
(b) Sales related-price. Granite Countertop Prices (index) was 100 in 2002, 79 in 1st Half 2003, 89 in 2nd Half 2003, 83 in 1st Half 2004, and 89 in 2nd Half 2004. Marble Tile Prices (index) was 100 in 2002, 110 in 1st Half 2003, 113 in 2nd Half 2003, 117 in 1st Half 2004, and 115 in 2nd Half 2004. Granite Tile Prices Index) was 100 in 2002, 190 in 1st Half 2003, 117 in 2nd Half 2003, 114 in 1st Half 2004, and 142 in 2nd Half 2004. Many observers display some wariness, but they feel that the indexes can be substantially explained by the strong Euro vs weak dollar situation. One observer indicated that the countertop slab prices he saw dropped from $100 per square foot in 2002 to $42 per square foot in late 2004, perhaps because of cheap Chinese slabs. Two other observers remind us that the countertop slab prices are stronger than the retail quotes for installation, which are cut-throat because everyone is entering the business: "Yes, we lose money on each installation job but we make it up on volume" (old joke).
(c) Foreign-U.S. Dimension Stone-related Competitiveness: European: Euros per U.S. dollar (average); 0.94 in 1999, 1.09 in 2000, 1.12 in 2001, 1.06 in 2002, and 0.89 in 2003; 0.84 in 4Q 2003, 0.80 in 1Q 2004, 0.83 in 2Q 2004, 0.82 in 3Q 2004, and 0.77 in 4Q 2004. Canadian: Canadian dollar per U.S. dollar (average); 1.48 in 1998, 1.49 in 1999, 1.49 in 2000, 1.55 in 2001, 1.57 in 2002, and 1.40 in 2003; 1.32 in 4Q 2003, 1.32 in 1Q 2004, 1.36 in 2Q 2004, 1.31 in 3Q 2004, and 1.22 in 4Q 2004. These International Monetary Fund statistics show that foreign producers selling in Euros have had a steady situation in late 2003 and for most of 2004, except for a drop in 4Q 2004. They continue under pressure from the strong Euro. The Canadian dollar stayed unchanged compared to the U.S. dollar in late 2003 and in most of 2004, except for a similar 4Q drop, so producers selling in Canadian dollars also had a steady situation.