Cement shortage may ease

News PCA June 11, 2004
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Signs of easing in international ship availability heighten the potential for cement imports to increase later this year

Signs of easing in international ship availability heighten the potential for cement imports to increase later this year. Additionally, rising interest rates could slow residential construction which is, in part, fueling tight cement supplies in some U.S. regions.


These factors would suggest manageable levels of cement demand during the second half of the year, allowing the prospects for cement shortage relief to emerge.


Robust levels of residential construction, combined with a recovering U.S. economy, have pushed cement demand to near record levels during the first part of 2004. These historically high levels follow an unusually active winter for construction, which prevented the traditional cement inventory buildup for use during the spring.


At the same time, supplies of imported cement--which traditionally fill the gap between domestic production and demand--have been disrupted due to tight international shipping availability and increased freight rates. The booming Chinese economy has tied up much of the bulk shipping available worldwide.


Many of the states currently experiencing cement shortages depend on imports as well as high levels of residential construction. While nonresidential and public construction is forecast to pick up, these gains may not offset the decline in residential construction.


Recent import flows increase the likelihood that cement shortage conditions may ease. Although imports to specific regions and ports have been impacted during the past six months, nationally imports are at their highest levels in nearly two years. Meanwhile, anecdotal evidence also suggests that freight rates and ship availability are easing slightly.


Overall, the 2004 construction market will be characterized by a mixture of sectors facing both decline and recovery. The final result is a projected growth rate in cement consumption that will ease in the second half of 2004 compared to current strong levels.


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