Cement demand growing with construction activity
May 2, 2012 1:21 PM
Stronger than expected job creation and the beginning of a construction industry recovery means gains in real construction spending will materialize this year—after seven years of consecutive declines, according to the latest forecast from the Portland Cement Association (PCA). Increases in cement consumption will follow.
PCA revised its fall forecast upward, anticipating a modest 3.7% increase in 2012, followed by a 7.6% jump in 2013 and a 14.1% increase in 2014. PCA forecasts all sectors of construction to be positive during 2014-2015, which typically results in large gains in cement consumption.
The forecast includes marginal improvements to nonresidential construction, an upward revision to housing starts, and an aggressive cement intensity gain, which is the amount of cement used per real dollar of construction activity.
“Cement usage is greatest at the early stages of construction with foundation work. The retreat of building starts during the recession had a huge impact on consumption and intensity,” says Ed Sullivan, PCA chief economist. “A construction start rebound in 2012 coupled with concrete’s competitive price compared to other building materials translates to increases.”
With successive years of economic and employment growth, the structural issues facing the construction industry will diminish, Sullivan says. For example, foreclosures’ adverse impact will fade, and return on investment for nonresidential investments will improve. Partially because of these improvements, state deficits eventually will be replaced by surpluses.
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