Harsh conditions in US cement industry will persist through 2010

PCA expects 2009 will represent this recession’s trough for United States’ total cement consumption – reflecting a 26.6% decline from weak 2008 levels. A modest 5% increase will materialise in 2010, with significant growth in consumption expected for 2011 and beyond.

'Given this weak outlook for private sector construction, any near-term turn in overall construction activity will be dictated by public construction,' Edward Sullivan, PCA chief economist said. 'Unfortunately here state deficits are sterilising the spending impacts of the federal economic stimulus plan.'

According to the Center on Budget and Policy Priorities, 33 states are in severe deficit positions for fiscal 2010, compared to 21 for fiscal 2009.

More than 90% of all highway and street spending is put-in-place by state and local governments. State fiscal conditions influence discretionary public construction spending and the harsh economic environment facing state and local governments may result in a double-digit decline in discretionary highway/street spending during 2009, Sullivan said.

'Reductions in state spending coupled by the slow release of stimulus funds suggest the cement industry will see very little second half stimulatory impact during 2009.  However, more than 5 million t of ARRA highway cement consumption should materialise in 2010 and 2011.'

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