As it was in 2004, strong cement demand continues this construction season, and with it brings tight supplies in some areas of the country, according to a recently released Portland Cement Association report. A May 2005 survey of cement supplier revealed that 23 states are reporting tight supplies of powder, with 10 of these states claiming critical supply levels in only portions of the state, typically focused around large metropolitan areas. These figures compared to PCA's fall 2004 survey, in which 35 states reported tight supplies.

To add to this good news/bad news scenario, the PCA's revised spring forecast predicts cement consumption will increase 3.0% in 2005 to another record level of 123.4 million metric tons. The forecast includes an improved determination of cement intensities, which refers to tons of cement per dollar of construction activity. Through the first quarter of 2005, U.S. cement consumption has increased 7.0% over very strong 2004 levels.

Because mortgage rates have remained near historic lows, home building continues to be very strong, says PCA Chief Economist Ed Sullivan. In addition, nonresidential and public construction are also expected to increase as the economy improves. Sullivan also anticipates that the favorable competitive position of concrete relative to steel is likely to continue. That scenario, coupled with advantageous construction mix changes, suggests that overall cement intensity will experience moderate growth.

To meet demand, additional cement is also being imported. Imports share of total U.S. consumption rose to 22.7% in 2004. PCA expects that imports share will exceed 25.0% during 2005 through 2007. Cement suppliers successfully increased import tonnage by 17.0% to 27.5 million metric tons during 2004 and are on a pace to import 32 million tons this year.