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Building Revival to Spur Cement Gains

Wednesday, February 13, 2013

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LAS VEGAS—With the fiscal cliff behind and 950,000 housing starts ahead for 2013, cement consumption is set to boom, with 8.1 percent growth projected through this year, according to a new economic analysis.

That's the latest forecast from the Portland Cement Association, delivered to concrete professionals Feb. 5 at World of Concrete in Las Vegas.

“Improving underlying economic fundamentals, the existence of large pent-up demand balances, and the diminishment of economic fiscal cliff uncertainty will combine to result in strong growth rates in 2013 and an increase in cement consumption,” the association said.

residential construction
Jaksmata / Wikimedia Commons

Growth in the residential construction market in 2013 will result in more cement consumption, according to the Portland Cement Association.

PCA adjusted its fall 2012 readings upward to reflect the recent federal “fiscal cliff” accord, recognition of stronger economic momentum, and more optimistic assessments for residential construction.

This would be the second straight year of cement growth. The report marked 2012 consumption at 78.5 million metric tons, an 8.9 percent increase over 2011.

Housing Starts and Hangovers

“Growth in 2013 cement consumption will be largely driven by gains in residential construction,” said PCA chief economist Ed Sullivan. “Housing starts should reach nearly 950,000 units, with single-family construction near 700,000 starts during 2013.

“We see starts hitting the one million mark in 2014 or 2015.”

Sullivan cautioned, however, that the first quarter of 2013 would actually show declines compared to the same period in 2012. The declines should not signal a weakening market, but rather, a “hangover from favorable 2012 weather conditions,” according to Sullivan.

Wikimedia Commons

Cement consumption in 2012 hit 78.5 million metric tons, an 8.9 percent increase compared to 2011. More growth is expected in 2013.

It’s the second quarter of 2013 that will demonstrate stronger gains in cement consumption, the organization predicts. Moreover, the accelerated rate is predicted to carry on into 2014. PCA projects an increase of 8.3 percent for 2014.

PCA also upwardly revised its long-range projections for 2015 to 2017. Annual growth during that period is expected to be as high as 9.2 percent.

Other Sectors Mixed

Nonresidential construction activity is also expected to grow 10 percent during 2013, PCA said.

However, public construction will continue to act as a drag on overall cement consumption in the coming months. Public construction decreased an estimated 5.4 percent during 2012, PCA noted.

Construction Jobs are Key

The forecast suggests that recent strengthening in job growth may pause near 150,000 jobs created monthly during the first quarter, with higher levels materializing during the second half of 2013.

“Job growth is a critical ingredient necessary to heal structural impediments that hinder a recovery in construction activity,” according to the association.

The association expects roughly 2 million jobs will be created in 2013.

PCA represents cement companies in the United States and Canada.


Tagged categories: Cement; Concrete; Economy; Housing; Housing starts; Portland Cement Association; Residential Construction

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