Sources: Portland Cement Association, Skokie, Ill.; CP staff
The latest PCA forecast notes that the industry is on track to finish 2013 with cement consumption 4.5 percent ahead of 2012, and is approaching the new year with powder demand trending 86 million metric tons, 8.1 percent higher than this year’s projected 80 million metric ton total.
Cement shipment increases in 2014 would sharpen a growth curve indicated across the forecast’s five-year horizon, projected 2018 consumption levels reaching 119 million metric tons. At that level, the industry would nearly equal the record consumption level of 2005 and mark a 14-year peak-to-peak interval—three to four years longer than typical post-war cycles.
Construction market growth could be dampened by Congressional drama that erodes consumer confidence and hinders recovery. “American consumers love drama. Moreover, Congress knows how to create it, with more on the way when the debt ceiling talks resume in early in 2014,” says PCA Group Vice President and Chief Economist Edward Sullivan. “Each time the political circus on Capitol Hill addresses extensions of the debt limit, budget approvals or the fiscal cliff, it harms economic momentum.”
The main construction sectors—residential, nonresidential and public—could each record gains in 2014. While the growth will be broad based, half of it anticipated for the new year will come from residential construction activity where there is the largest amount of pent-up demand. The commercial and institutional sector will contribute another 25 percent. When each sector contributes to growth, robust gains in cement consumption rates typically materialize. PCA predicts real construction spending to grow 1.3 percent in 2013 and 8 percent in 2014. Sullivan believes roadway construction activity hit a trough in 2013, noting however, that “improving state finances could provide surpluses by 2015 that states can apply to neglected infrastructure spending.”