Pca Forecaster Sees 2006-10 Powder Consumption Dropping 33 Percent

Although in his July Mid-Year 2008 Forecast, PCA Chief Economist Edward Sullivan stated his belief that the current massive cement consumption decline would last only four years (2006–2009) and see levels fall by 30 million metric tons, his end-of-year outlook paints a much bleaker story

Source: Portland Cement Association, Skokie, Ill.
Although in his July Mid-Year 2008 Forecast, PCA Chief Economist Edward Sullivan stated his belief that the current massive cement consumption decline would last only four years (2006Ò2009) and see levels fall by 30 million metric tons, his end-of-year outlook paints a much bleaker story. The weak economy and tight credit conditions, coupled with severe job losses and the resulting decline in state government revenues, will translate into significant weakness for the construction industry through 2010. Sullivan is adjusting his cement consumption forecast farther down, with 2010 levels off 33 percent, or 42 million tons, against the industry’s record figures in 2005.

The latest PCA forecast of cement, concrete, and construction predicts a 12.8 percent decline in cement consumption in 2008–to dip just under the 100 million-metric ton mark, followed by 11.9 percent and 2.1 percent declines in 2009 and 2010, respectively.

The PCA report cites the continued drop in residential starts and the erosion of the strong fundamentals supporting nonresidential construction as major factors leading to reduced cement consumption. The weak economy also has affected the public construction sector. PCA expects cement consumption in residential to decline 31.7 percent in 2008 and 16.9 percent in 2009, but a rebound of the market in the second half of 2010 will lead to a 12.1 percent housing sector increase for the year. Consumption in the nonresidential sector is expected to decline 22.2 percent in 2009 and the public sector will see 6.6 percent declines in 2009 and 2010.

Sullivan predicts a recovery to begin in 2011 with a 10.3 percent increase compared to 2010 consumption and a return to near-record consumption levels (of about 115 million metric tons) by 2013.