Efforts to Alleviate Cement Shortages Continuing
With the housing boom showing no signs of abating, builders in several markets are reporting tight supplies of cement. To help meet the growing demand, which is pushing up prices and delaying construction projects across the country, NAHB continues to work with top Administration officials and members of Congress to urge domestic producers to drop their objections to rescinding costly duties on Mexican imports.
Discussing the matter with Commerce Secretary Carlos Gutierrez this spring, NAHB Executive Vice President and CEO Jerry Howard pressed for a favorable resolution to the issue. Gutierrez acknowledged the problem and pledged to look into the matter.
Following up on that meeting, NAHB has held several discussions with Department of Commerce officials, providing them with information on how the shortages are affecting the industry and what regions and states are being hit the hardest. Reiterating industry concerns, NAHB recently sent a letter to Gutierrez seeking a meeting to discuss the situation.
NAHB is also working with Cemex, the leading Mexican producer, as well as U.S. producers, to help formulate and facilitate a negotiated settlement that addresses the supply problems facing home builders. NAHB would support a framework that leads to eventual free trade and increases cement supplies in the near term to areas of the country that rely most heavily on imports, particularly Florida and Texas, two states that have been hardest hit by the shortages.
On Capitol Hill, NAHB is urging members of Congress to contact the Commerce Department and call for the cessation of Mexican cement tariffs. In addition, NAHB has sent letters to U.S. cement producers describing the deep concern of the nation’s home builders over growing shortages, and asking them to take whatever steps they can to alleviate this situation, including dropping restrictions on imports from Mexico.
As a practical matter, the tariffs cannot be replaced by a negotiated settlement unless the domestic industry agrees to it. The U.S. imposed the duty in 1990 after American producers complained that Mexican cement was entering the U.S. at below-market prices.
Mexico is appealing the duties to the World Trade Organization and the North American Free Trade Agreement, but a final decision is unlikely for some time.
Despite current shortages, U.S. cement suppliers are reluctant to rescind the $33-a-ton duty because they are fearful they could lose market share through increased competition.
In addition, they have hopes of receiving money under the “Byrd Amendment,” a law sponsored by Sen. Robert Byrd (D-W. Va.) that allows U.S. firms to receive duties from foreign rivals that are collected by the U.S. government. The World Trade Organization has ruled this statute illegal and the Bush Administration has asked the Congress to repeal it.
Arguing that the tariffs are outdated and harming builders, consumers and other users of cement products, NAHB remains committed to working with the Commerce Department to persuade domestic cement producers to end their support for the Mexican duties.
The high anti-dumping tariffs are limiting supply from Mexico, which has excess capacity. Because of its close proximity to the U.S., it takes only four days to import cement from Mexico, compared with 40 days from Asia.
The latest data from the Portland Cement Association (PCA) show that the situation could deteriorate over the coming months. PCA’s May survey of cement suppliers found shortages or tight supplies in 23 states, compared to 35 states last fall. However, PCA economists report that an additional five states have been added to the list over the past few weeks and their data show that demand for cement is expected to peak in late summer.
NAHB is currently conducting a nationwide survey of builders to assess the availability of cement and other building materials; the results are expected later this month.
Overall, about 23% of U.S. cement consumption was filled by imports in 2004, up from 20% in 2003. The average wholesale price of cement production was $85 per ton in 2004, up from $75 in 2003, according to the U.S. Geological Survey.
PCA reports that the nation’s demand for cement remains at a record high level. Cement consumption in the U.S. was just shy of 120 million metric tons in 2004 and first quarter 2005 figures are 7% above last year’s very strong levels.
In addition to Florida and Texas, shortages have also been encountered in other parts of the country, including Arizona, Nevada, Idaho, Washington and several mid-Atlantic states.
In the interim, NAHB is urging builders to work with their suppliers to post a firm commitment to obtain the cement that they need for their jobs.
For more information, e-mail Michael Strauss at NAHB, or call him at 800-368-5242 x8525.