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Cement Consumption Downturn to be worst in post-WWII Era
May 15, 2008

The Portland Cement Association (PCA) forecasts the severe economic weakness of the U.S. economy will have a strong impact on cement consumption and the construction industry. An expected consumption drop of 11 percent is expected in 2008, with a 5.5-percent drop projected for 2009. PCA predicts the total cement consumption for this year will be 101.7 million metric tons.

A record consumption of 128 million metric tons was reached in 2005. Peak-to-trough declines in consumption will total nearly 30 million metric tons. This marks one of the worst industry downturns seen since the Great Depression. 

PCA Chief Economist Edward Sullivan says this is part of a four year trend with factors such as high fuel prices and slow job creation and tight lending standards all playing a part. Sullivan anticipates that while harsh residential conditions continue to act as a significant drag on cement consumption, the nonresidential sector will also see large declines for the next two years.

"Although it grew nearly 11 percent in 2007, nonresidential construction spending is expected to fall almost eight percent in 2008 and another 12 percent in 2009," Sullivan said. "Nonresidential 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."

An additional slowdown in public construction, which accounts for nearly half of total cement consumption in the United States, is predicted for 2009 and will continue through 2010.

Posted by Lisa Doyle on May 15, 2008 | Comments (0)