PCA’s dire warning for US

14 May 2008

The Portland Cement Association says the US construction industry is facing one of the worst downturns of the post-war era, based on its latest forecast for the cement, concrete and construction sectors.

The report says Portland cement consumption will fall-11% in the US this year, with another -5.5% decline in 2009. Cement consumption this year is expected to be 101.7 tonnes, compared to record levels of 128 million tones in 2005.

The difference between the peak and the trough of the cycle is forecast to be almost 30 million tones of cement, and the PCA says this would make it one of the worst industry downturns since the Great Depression.

"We are currently in the third year of a four-year industry contraction that began in 2006," said PCA chief economist Edward Sullivan. "High fuel prices, slow job creation, and tight lending standards will all adversely impact the entire spectrum of construction activity."

Sullivan anticipates that while harsh residential conditions continue to act as a significant drag on cement consumption, the non-residential sector will also see large declines for the next two years.

"Although it grew nearly +11% in 2007, non-residential construction spending is expected to fall almost -8% in 2008 and another -12% in 2009. Non-residential construction is closely tied to economic activity. As the economy softens, the expected return on commercial investments decline, reducing the incentive to build and expand," he said.

An additional slowdown in public construction, which accounts for nearly half of total cement consumption in the US, is predicted for 2009 and will continue through 2010.

The PCA expects Cement consumption to pick up strongly in the second half of 2010. By this time, according to the PCA report, all regions of the US should be experiencing a recovery in housing and non-residential construction will be on the upswing.

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