In a revised forecast presented to the Portland Cement Association board earlier this month, Chief Economist Ed Sullivan noted that cement consumption is on pace to increase 0.6 percent in 2006 and 0.3% in 2007. Both years' figures — 127.5 million and 127.9 million tons, respectively — are 1% to 2% below previous forecasts, owing to a housing downturn and softer economic conditions, although Sullivan sees 2008 cement shipments climbing 2.7% above next year's projected level. If the numbers hold, 2008 would represent a fifth consecutive year of record powder shipments, mirroring a 1994-2001 growth pattern that was interrupted by the lagging effects of the 2001-02 recession.

“In recent years the U.S. and the cement industry have experienced unprecedented growth,” Sullivan explains. “However, construction activity is starting to soften and this will create an adverse impact on cement consumption.” Growth in cement intensity — indicating the tons of cement per construction dollars — is key to the market growth during the next couple of years, he adds. “Our forecast projects that cement intensities will increase by 2.0% in 2007, fueled by a favorable relative price position versus asphalt and steel, as well as a shift towards higher cement usage construction projects,” Sullivan affirms. “Code changes in hurricane-prone regions, improved concrete products, and concrete's growth as a ‘green' building material will all contribute to this despite a decrease in construction activity.”

The PCA fall forecast does not reflect a continued sharp decline in housing. Sullivan says the market's recent downward shift was driven by the departure of speculators, which in turn will spur a price correction and improve affordability for the average home buyer.

Expect an in-depth Construction and Cement Forecast in the January/February 2007 issue of Cement Americas.