Rising mortgage rates, a growing prevalence of shaky, high-risk home loans and a forcasted 2.2 per cent decline in residential construction this year will do little to ease tight cement supplies, according to PCA’s economist Edward Sullivan. “A strong recovery in spending for nonresidential construction, such as water-treatment facilities, highways, hospitals and office buildings, is "going to offset the declines we are going to see in residential."
He predicts US cement consumption this year to top 130Mt, a 3.7 per cent increase over last year. Furthermore, cement use is expected to rise an average 2.5 per cent annually through 2009.
Tight supplies will likely continue as vendors try to fill the growing number of orders for cement and related concrete materials. The crunch has even started to trickle down into retail markets, which make up a small portion of total cement usage. Late last month, for example, signs inside a Home Depot store in Tucson, Ariz., told buyers, "Limit six bags of Portland cement per customer." When asked why the store put up the signs, clerks told reporters that the problem was related to plant shutdowns in the area.
The anticipated cooling in housing starts across the nation may help to alleviate such drastic measures-retail or wholesale. Many of the regions hit the hardest by shortages in the past two years have had a "high dependence" on residential markets, Sullivan noted in Jan. 6 report.
Cement and clinker imports, which jumped up 22 per cent last year, are expected to go up sixper cent this year and another 1.4 per cent next year. As some trade groups have been lobbying Congress to lift anti-dumping duties on cement imported from Mexico, others say it would do more harm than good. "If you are in Idaho and you have a shortage, Mexico is not going to help you," Sullivan told reporters at a press conference held Jan. 17 at the World of Concrete. Sullivan also added that rebuilding along the hurricane-battered Gulf Coast probably won’t draw down cement supplies immediately, but may "pick up steam" toward the latter half of the year. "At this point, it is still a wild card," he said.