Availability of cement has been limited in some regions of the U.S. since the spring. What initially began in Florida and the southeastern United States has expanded, while remaining a largely regional problem.

Since a June survey by Portland Cement Association (PCA) Economic Research reporting 23 states with shortage conditions or tight supplies, six states have been added (Arizona, Delaware, Missouri, New Jersey, Pennsylvania, and Utah). Shortage conditions in the North Central region (Iowa, Minnesota, Nebraska, North Dakota, and South Dakota) have eased somewhat as plant specific production troubles are being resolved.

Wet weather along the east coast has dampened construction activity; as a result, Alabama, Georgia, and South Carolina have witnessed at least a temporary easing in shortage conditions. In total, 29 states are affected by cement shortages.

Fueled by residential construction, cement demand in most states remains strong. In addition, many producers currently hold very lean inventories. These factors, coupled with the curtailment in imported cement, have raised the likelihood of shortages. Imported cement traditionally fills the gap between domestic production and demand. In 2003, imported cement represented 22.6% of total consumption. Regions with the strongest demand for cement and the highest reliance on imports remain the greatest risk of developing shortages in the near term.

The short-term solution, according to PCA, is to import more cement. However, limited seaborne vessel availability, high shipping rates, and strong global cement demand are hindering the industry's ability to optimize this option. In the longer term, many cement companies have engaged in aggressive modernization and expansion programs. Announced capacity increases are projected to result in nearly 10 million tons of new capacity by 2008 — roughly an 11% increase in domestic capacity.

Zoning laws, permit activity, and regulatory roadblocks have long been a problem for heavy industries such as cement and will continue to limit the actual realized amount of possible expansion.

However, signs of easing in international ship availability heighten the potential for cement imports to increase later this year. Additionally, rising interest rates could slow residential construction in some U.S. regions.

These factors would suggest manageable levels of cement demand during the second half of the year, allowing the prospects for cement shortage relief to emerge.