PCA: Economy Takes Toll on Cement Consumption

MayJune 2008
Industry News

PCA: Weak Economy Takes Toll on Cement Consumption, Construction Industry as a Whole

According to the Portland Cement Association (PCA), the struggling U.S. economy is being reflected in cement consumption and the construction industry as a whole. The association reported recently that Portland cement consumption is expected to drop 11 percent this year, followed by an additional 5.5 percent in 2009. The PCA predicts total cement consumption in this year to be 101.7 million metric tons.

“We are currently in the third year of a four-year industry contraction that began in 2006,” Edward Sullivan, PCA chief economist said. “High fuel prices, slow job creation, and tight lending standards will all adversely impact the entire spectrum of construction activity.”

Sullivan said in a released statement that while harsh residential conditions continue to act as a significant drag on cement consumption, the non-residential sector also would see large declines for the next two years.

“Although it grew nearly 11 percent in 2007, non-residential construction spending is expected to fall almost eight percent in 2008 and another 12 percent in 2009,” Sullivan said. “Non-residential construction is closely tied to economic activity. As the economy softens, the expected return on commercial investments decline, reducing the incentive to build and expand.”

Further, the PCA predicts a continued slowdown in public construction, which the association says accounts for nearly half of total cement consumption in the United States. The downward trend will continue through 2010, the PCA reports.

The PCA targets the second half of 2010 with the trend of strong growth in cement consumption. By this time, it says, all regions of the country should be experiencing a recovery in housing, and non-residential construction will be on the upswing. MD