Gambling on more cement

Gambling on more cement
Published: 18 June 2004

A report in the Las Vegas Sun newspaper suggests that the cement shortage that has affected different regions of the United States, including Southern Nevada, may abate slightly later this year. But local industry experts wonder whether the shortage will ease in Las Vegas and said continued price increases in cement, steel, and wood are beginning to add up.

Signs of greater international shipping availability heighten the potential for cement imports to increase to some regions later this year. Rising interest rates could slow residential construction, which is in part fueling tight cement supplies in some US regions, reported the Portland Cement Association. These factors suggest manageable levels of cement demand during the second half of the year, allowing the prospects for cement shortage relief to emerge, the association reported.

Carina Homes Purchasing Director Garry Moon said he tries to anticipate increases in prices of building materials, but because of the rapidly changing prices, the local builder has had to absorb the increased costs. He said relief may come in obtaining cement later this year, but only because of weather in the Midwest and East Coast make building in fall and winter less than ideal. "That’s when you see the traditional down swing in the market," he said. "But I don’t think (prices) will ever go back down to where they used to be."

Although imports of cement to specific regions and ports have been restricted during the past six months, nationally imports are at their highest levels in nearly two years. Rich Warren, executive director of the Southern Nevada Concrete & Aggregates Association, said he expects cement shortages will most likely continue in the West because of the region’s dependency on imports from China and Thailand, both large producers of cement. Those sources have tapered off as that region uses more of its own supply.

"Typically we haven’t had shortages in the desert southwest, but this is a unique global situation," he said. "We still have customers on allocation, and typically how we do that, is (companies) are getting 80 to 90 percent of supplies, so they are filling 80 to 90 percent of orders." Warren also said the West is not as affected by seasonal changes, which can often decrease demand for cement.

Higher demand for cement, up 10 percent to 15 percent, makes it hard to believe that there will be relief in the area’s future, said Jim Mettler, senior sales representative for the Las Vegas area for the California Portland Cement Co. "What has happened is last fall it was extremely busy, and (southwest manufacturers) were running full board to keep up, but it takes its toll when that goes on for so long," he said. "As far as the imports, it’s hard to predict how that will shake out, lots of things can change week to week."

A variety of reasons have contributed to the shortage, which has caused some Las Vegas-area concrete suppliers to limit the product and in some cases shorten their workweeks, including the booming Chinese economy, a shortage of shipping fleets to deliver the material, and the US construction boom. In the West, regional transportation problems, such as a shortage of truck drivers and rail slowdowns, have hampered shipments to the Las Vegas Valley, and have contributed to the problem, local manufacturers said.