Housing correction hits cement industry hard

August 11, 2010

Burdened by the hard correction in the housing market, cement consumption has weakened in 2007, according to the most recent forecast from the Portland Cement Association (PCA).

Cement consumption this year is expected to fall 4.4 percent lower than 2006 levels.

According to PCA Chief Economist Ed Sullivan, however, the decline will be temporary, with a 2.2 percent cement consumption gain anticipated for 2008.

"Sustained growth in cement consumption normally occurs when all three sectors of construction--residential, nonresidential, and public--are thriving," Sullivan said. "With the current gain trends in nonresidential and public and most regional residential markets expected to back to track by 2009, we anticipate the onset of a period of continued growth to start that year."

Additionally, the PCA's forecast adjusts its outlook regarding cement intensities. Cement intensity measures the amount of cement used per real dollar of construction activity.

Originally expected to increase and cushion the decline in cement consumption, cement intensities have declined for ten straight months. Weather conditions, lower construction activities in key regions and other conditions are factors that may be contributing to an erosion in cement intensity. PCA now expects a modest decline, roughly one percent, in 2007 cement intensities.

With a decrease in cement consumption, a reduction of cement imports is also predicted.

"The combination of further expected weakness in the U.S. cement markets, high inventory levels and high freight rates has lead to a significant decline in cement import levels thus far in 2007," Sullivan said.

About PCA

Based in Skokie, Ill., the Portland Cement Association represents cement companies in the United States and Canada. It conducts market development, engineering, research, education, and public affairs programs. More information on PCA programs is available at

         
 

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