August 23, 2010
Nation's Building News

The Official Online Weekly Newspaper of NAHB

Lag in Federal Highway Spending Delays Rebound in Cement Demand Until 2013

According to the most recent economic forecast from the Portland Cement Association (PCA), cement consumption won’t begin to rebound significantly until 2013, largely because of delays in extending a federal highway bill.

“The turning point for cement consumption will most likely occur in 2013,” said Edward Sullivan, PCA’s chief economist. “Then we will have a new highway bill in fiscal 2013, supplemented by the recovery in state fiscal conditions. At the same time, nonresidential and residential building should be on a solid upswing.”

The delay in extension of a highway bill has reduced cement consumption by one million metric tons this year, he said.

PCA is projecting a 2.4% increase in cement consumption this year compared to severely depressed levels in 2009. That is forecast to be followed by gains of 6.7% in 2011, 8.4% in 2012 and 18.8% in 2013.

Little lift is expected to come from either residential or commercial construction this year, according to the PCA forecast. Cement for commercial building is projected to drop 23.3% in 2010, and home building will remain nearly unchanged from 2009 levels.

PCA shows residential construction growing 12.1% in 2011 as foreclosures flatten out and job creation picks up some momentum.

Cement consumption this year will be assisted by the stimulus package as the composition of the projects shifts away from resurfacing to more cement-intensive projects like road widening and bridgework — attributing 4.1 million metric tons, followed by 2.8 million metric tons in 2011.

For the same period, PCA foresees a decline in cement demand generated by the states, many of which are facing large deficits and channeling funds to higher priority areas.

Based in Skokie, Ill., the Portland Cement Association is a member of the National Council of the Housing Industry — The Leading Suppliers of NAHB.

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