Sources: Portland Cement Association, Skokie, Ill.; CP staff
PCA’s revised cement consumption forecast walks back an earlier, more enthusiastic 2015–2017 demand picture. Prior forecasts that held U.S. cement shipments gaining 7-8 percent annually, beginning this year, have been adjusted to 3.5 percent, 2015; 5 percent, 2016; and, 5.7 percent, 2017.
A slowdown in cement intensity—reflecting material tonnage per dollar of construction activity—is a significant contributor to the revised forecast, notes PCA Chief Economist Ed Sullivan. “The main indicators pointing to lower intensity levels are uneven regional construction activity, a slowdown in the number of starts, and increased use of supplementary cementitious materials in concrete,” he says, adding that lower oil prices have significantly reduced construction activity in energy-dependent areas such as Texas and North Dakota.
Underlying economic fundamentals are still strong, as indicated in the labor market. Against a backdrop of unemployment below 6 percent, Sullivan observes, sustained monthly job creation of 225,000-plus translates into more consumer spending power, plus higher state and local tax receipts—all leading to stronger construction spending in 2016.