Construction is suffering. Builders' merchants and housebuilders on both sides of the Atlantic have been subject to collapsing expectations and share prices. Yet the cement makers have proved more resilient. Lafarge, which now makes half its sales in emerging markets after buying Egypt-based Orascom, has fallen only 12 per cent since last summer's peak. European housebuilders have more than halved in the same period.

European construction industry sales growth has averaged 15 per cent annually for the past five years. Almost two-thirds of that expansion came from building or renovation in the residential sector, estimates Credit Suisse. With the boom over, falls in cement demand have been reported in Spain and will probably follow in France and the UK. Investors appear, unrealistically, to be betting that new infrastructure investment will pick up the slack in mature countries. At least industrialisation in the developing world should stay strong.

The big problem, however, is that supply is set to grow fast, as strong demand has spurred investment in new production capacity. This typically takes two to three years to build. From 1995 to 2005, orders for new plants averaged 35m tonnes worth of additional production annually, excluding China. In 2006, 140m tonnes were ordered, and 125m tonnes were contracted last year, twice the sustainable long-term rate of demand growth estimated by equipment maker FLSmidth.

Half of those orders were placed in the Middle East and India. The top six cement companies control less than a third of production there, providing little hope of pricing discipline if capacity utilisation starts to fall. Meanwhile, high shipping costs, which have supported pricing by limiting imports, may come under pressure as deliveries of dry bulk carriers rise. Valuations are not rich - Lafarge trades on 11 times forward earnings - but, as elsewhere in construction, valuation is a poor foundation if earnings begin to crumble.