USA: Cement Consumption Forecast to Grow 5% in 2015 and 6.5% in 2016

Despite volatility in equity markets and concerns about global growth conditions, Portland Cement Association (PCA) Chief Economist and Group Vice President Edward Sullivan said “the fundamentals in the United States are sound and should support sustained growth in construction activity.”

The U.S. economy is characterized by steady and strong gains in net job creation, low inflation, low interest rates, improving business and consumer confidence, all of which paints an optimistic near-term outlook. While some sectors have been hurt by a strong dollar and low oil prices, these factors hold the potential of a growth dividend later in the forecast horizon.

PCA’s Market Intelligence group expects construction activity will grow 4.8% this year and even stronger growth is expected for next year. Cement consumption is expected to grow 5% this year and 6.5% in 2016. Each of the three key sectors on cement consumption, residential, nonresidential and public construction are experiencing growth. Typically, when all three sectors are positive strong volume gains materialize.

USA: CEMENT CONSUMPTION GROWTH CONTINUES IN 2014

Although recent economic indicators point to a tempering of the U.S. economy, PCA is maintaining its forecast for steady growth in construction and cement consumption during the next five years.

A recent PCA forecast indicates a 7.9 percent increase in cement consumption for 2014, almost double from the 4.5 increase in 2013. The industry expects to see double-digit growth in 2015 and 2016 with 10 percent growth both years.

“There is considerable evidence that the economy’s growth path has softened during the past several months,” PCA chief economist and group vice president Edward Sullivan said. “But we believe that the underlying economic fundamentals are stronger than the data suggest.”

Real GDP weakened considerably during the fourth quarter to 2.6 percent from 4.1 percent in the third quarter of 2013. Preliminary first quarter estimates growth at a meager 0.1 percent. Furthermore, consumer confidence has recorded setbacks, mortgage applications have recorded sustained weekly declines, the housing market has stalled, and real put-in-place construction activity has slowed.

The principal cause for the recent economic weakness, according to Sullivan, is the unusually adverse weather conditions across the United States during the fourth quarter of 2013 and first quarter of 2014.

“The weather conditions had an obvious impact on cement consumption – limiting construction and concrete use. The northern states and much of the east coast were hit hard, with year-over-year losses of as much as 25 percent,” Sullivan said. “However, despite this drag, nation-wide cement recorded gains. Through the first quarter, cement consumption increased 4.5 percent compared to the same period in 2013.”

USA: Forecast cement consumption increase 7.9%

The PCA – formerly the Portland Cement Association – forecasts US cement consumption will increase +7.9% this year. This is almost double last year’s +4.5% growth rate, and the association expects similar steady increases in demand for the next five years.

PCA chief economist and group vice president Edward Sullivan said, “There is considerable evidence that the economy’s growth path has softened during the past several months, but we believe that the underlying economic fundamentals are stronger than the data suggest.”

The PCA said US real GDP growth weakened considerably to +2.6% in the fourth quarter of last year, compared to +4.1% in Q3. It added that preliminary first quarter estimates were for just +0.1% growth and noted other headwinds like declining mortgage applications and slower construction activity.

However, Mr Sullivan said this was a seasonal effect. “The weather conditions had an obvious impact on cement consumption – limiting construction and concrete use. The northern states and much of the east coast were hit hard, with year-over-year losses of as much as -25%. However, despite this drag, nation-wide cement recorded gains. Through the first quarter, cement consumption increased +4.5% compared to the same period in 2013,” he said.

USA: US monthly shipments rise 17.5 per cent YoY

Total shipments of Portland and blended cement in the US and Puerto Rico for April 2012 were almost 6.7Mt, 17.5 per cent higher than shipments in April 2011, data from the US Geological Survey (USGS) shows.


Shipments for the year through April were 21.9Mt, up by about 19%. The leading producing states in April were Texas, Missouri, California, Florida, and Pennsylvania, in descending order and accounted for 43% of total output. The leading consuming States (Texas, California, Florida, Ohio, and Illinois, in descending order) received about 37% of the April total shipments.


Clinker production totaled 5.4 Mt in April, about 6% higher than output in April 2011. Production for the year through April was 19.1Mt, up by almost 13%. The leading clinker-producing states in April were Texas, California, Missouri, Pennsylvania, and Florida, in descending order, and these accounted for almost 48% of the US total production. 


April 2012 imports of cement and clinker of about 585,000t were 4% higher than those in April 2011. Imports for the year through April were 1.68Mt, up by 10%.

MEXICO: Mexico's Cemex Tumbles Most in Seven Months on U.S. Home Sales

Cemex SAB, the largest cement maker in the Americas, dropped the most in seven months in Mexico City trading after plunging sales of existing U.S. homes signaled cement demand may miss expectations.

Cemex dropped as much as 7.2 percent to 9.83 pesos, the most since Jan. 27. Shares were 4.6 percent lower at 10.10 pesos at 12:44 p.m. New York time.

Sales of U.S. previously owned homes dropped 27 percent in July, twice as much as forecast, to a 3.83 million annual pace, figures from the National Association of Realtors showed today in Washington.

“These figures suggest the recovery will be slower than expected,” Gonzalo Fernandez, a Mexico City-based analyst with Banco Santander SA, said in a telephone interview.

Demand for single-family houses dropped to a 15-year low and the number of homes on the market swelled, the report showed. Economists projected sales would fall 13 percent from June’s previously reported 5.37 million pace.

Cemex is the company in Mexico’s benchmark IPC stock index with greatest exposure to the U.S. economy, according to Fernandez.