Despite the persistent decline in residential and nonresidential construction activity, cement prices are expected to remain stable this summer and show just a 0.9% increase in 2009 and another 0.4% hike in 2010. Analyst Arminé Thompson, an economist at IHS Global Insight’s offices in Washington, says "cement prices will increase slightly even among falling demand because of production cuts."
U.S. cement demand is dwindling along with the construction market, Thompson writes to clients based on data that always is late arriving. "Consumption was off 28.7% year to date in March 2009, and we expect this trend to continue." She adds that the U.S. economic stimulus plan is not expected to contribute to cement demand until the second half of 2010, when more cement-intensive projects come online. "Cement demand will recover when the nonresidential construction market improves in 2011," she says.
Producers have been aggressive about cutting back on production in order to ensure that not too much of a cement surplus is created during this time of soft demand. "U.S. domestic cement shipments were down 20.7% year-over-year in February 2009, and we expect this trend to continue," she writes.