A weak U.S. economy will severely impact cement consumption and the construction industry, reports the Portland Cement Association, a Skokie, Ill.-based trade group. In 2008, Portland cement consumption is expected to drop 11%, followed by an additional 5.5% dip in 2009. PCA predicts total cement consumption to be 101.7 million tonnes this year, which is down 26.3 million tones from the industry's peak in 1995.
"We are currently in the third year of a four-year industry contraction that began in 2006," says 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."
Peak-to-trough declines in consumption will total nearly 30 million tonnes, marking one of the worst industry downturns since the Great Depression. Sullivan expects the housing downturn to continue dampening cement consumption for both the residential and nonresidential sectors for the next two years.
"Although it grew nearly 11% in 2007, nonresidential construction spending is expected to fall almost eight percent in 2008 and another 12% in 2009," Sullivan says. "Nonresidential 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."
An additional slowdown in public construction, which accounts for nearly 50% of domestic cement consumption, is predicted for 2009 and will continue through 2010. A rebound isn't expected until the second half of 2010 as housing and nonresidential construction begin to rebound.