U.S. construction activity and cement consumption will
experience significant declines this year, according to a recent PCA
Economic Research report.
Portland cement consumption is expected to drop 10% in 2008,
followed by an additional 3.6% in 2009. Total 2008 cement
consumption is predicted to be 102.7 million metric tons.
"High fuel prices, acceleration of home foreclosures and the impact of the
sub-prime crisis on credit standards are some of the current conditions
that lead us to believe the economy is already in a recession," Edward
Sullivan, PCA chief economist, said. "Even when there is recovery later
this year, it will not immediately affect the construction and cement
industries."
Sullivan anticipates high home inventory levels to depress the residential
sector until second half of 2009, causing a 26.5% decline in housing
starts for 2008. The nonresidential sector, which is closely tied to
economic activity, will fall 7%.
"Nonresidential construction typically takes 18 months for recovery. This
implies further declines in 2009, coupled with a slowdown in public
construction activity during the same period," Sullivan said.
According to the PCA report, in the second half of 2009 the economy will
gain strength as residential inventories are burned off and credit terms
ease. This will lead to a 5.2% growth in cement consumption in 2010
followed by an even stronger gain in 2011.
