PCA’s Sullivan confirms favorable 2018-20 cement consumption curve

Sources: Portland Cement Association, Skokie, Ill.; CP staff

The PCA Market Intelligence Group’s annual Spring Forecast projects cement consumption growth of 2.8 percent in 2018 and 2019, along with 4 percent the following year, as impacts from potential federal infrastructure spending are likely to take effect. An analysis shows prospective annual cement shipments of 99.3 million, 102.1 million, and 106.1 million metric tons for the period.

A strong economy and job market, plus anticipated increase in infrastructure spending, suggest what PCA Senior Vice President and Chief Economist calls “a modest acceleration in real GDP, construction markets and cement consumption.”

Robust infrastructure spending isn’t likely to occur until the fourth quarter of 2019, given the key steps that must occur: Passage of funding legislation; federal and state paperwork; bid letting and review; and, contract awards leading to construction. Whatever plan actually materializes, Sullivan notes, “it will take time to implement a construction infrastructure program from passage in Congress to the first shovel. This is an aspect often neglected by many economists. PCA has evaluated the time each process takes to impact actual construction activity. As a result, the timing of PCA’s impact of an infrastructure program on actual construction is later than most economists estimate.”

While interest rates and inflation are expected to see slight increases, consumer debt is low, thereby adding to potential growth in consumer spending. “These factors suggest a modest acceleration in real GDP, construction markets and cement consumption,” Sullivan concludes. “Add in benefits from tax reform and we will likely see the economy improving at a more brisk pace.”