Cement recovery hinges largely on public construction

Expected increases in public construction activities will pave the way for improved cement consumption in 2010 and beyond, according the most recent economic forecast from the Portland Cement Association (PCA).

In 2010, PCA anticipates a modest 5% increase in consumption over severely depressed 2009 levels. The 3 to 5 million metric tons gain in cement use will materialize during the second half of the year. A 13.3% jump is predicted for 2011, followed by an 18.7% increase in 2012.

“The 2010 recovery in cement consumption lays largely on expectations for public construction activity,” Edward Sullivan, PCA chief economist said. “Spending from the stimulus bill will more than double to $12 billion and that spending is expected to reflect an increased share of major highway construction and bridge projects—high cement-intensive projects.”

Although nonresidential sectors like oil and farm construction contribute to the 2010 cement consumption increase, consumption accrued to commercial building will decline 29% on top of a 38-year low reached in 2009. The residential sector is expected to become a modest contributor to growth during 2010—something that has not materialized since 2005.

“The economy is recovering and improving its core fundamentals. However, recovery for the construction markets will be slowed by the continuation of tight lending conditions, high foreclosure rates and weak job markets,” Sullivan said.