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US will be a bright spot for cement demand in 2017

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World Cement,

The US has been a bright spot for cement producers, as demand for building materials grew through 2016 and is expected to continue this trend in 2017. Construction investment grew by 2.7% over 2017 with more robust growth in the commercial and residential sectors, said Buzzi Unicem in its latest results statement. Higher sales prices also boosted cement companies results.

HeidelbergCement announced a 4% rise in North American cement sales in 2016 to 15.93 million t, while Argos reported US sales up 18.5% on the previous year. The US now makes up around 50% of Argos’ revenues, the company added, while its US earnings topped guidance at US$181 million.

“We are very satisfied with the results of the US regional division, as they ratify the visionary decision taken 11 years ago by the company to enter […] the largest economy and most demanding market,” said Argos’ CEO, Juan Esteban Calle, in a statement.

HeidelbergCement meanwhile reported revenues of US$4.24 billion – a 2% increase on the previous year – while operating income jumped 21% at US$690 million on the back of falling energy costs and rising average prices.

“Particularly strong growth of building materials deliveries was recorded in the north and south of the USA,” the company said. Sales in the west suffered from bad weather in the first quarter, but were stable over the year.

“Main drivers in 2016 were commercial construction and the construction of multi-family houses,” HeidelbergCement added.

Despite recording a 1.7% fall in cement sales, on the back of weakness in the Texan market, Buzzi Unicem recorded an increase in net sales revenues from its US division. Sales were up 0.8% at €1.12 billion on favourable price trends, the company said.

Beyond the multinationals, US-based producers were also positive with Summit Materials’ cement business reporting a 37% rise in sales revenues – helped by its recent acquisition of the 1.1 million tpy Davenport cement plant from Lafarge North America – and a 7.5% increase in average sales prices.

Brightness continues through 2017

The outlook is positive for 2017, as US economic recovery is expected to continue, resulting in further demand growth for building materials.

“We will once again benefit from the economic development in the USA,” summarised Dr Bernd Scheifele, CEO of HeidelbergCement.

“Our cement business represents a clear catalyst for growth heading into 2017,” said Tom Hill, Summit’s CEO in a statement. “Limited domestic production capacity and continued growth in US demand have combined to create opportunities for sustained growth in industry cement pricing.”

Martin Marietta – which saw sales down in 2016 on weakness in its key Texan market – was positive on 2017, forecasting cements sales to increase by between 4% and 10%, its Chairman, President and CEO, Ward Nye, told analysts on a conference call.

In addition to a strengthening economy, the US construction has been boosted by increased infrastructure funding from the federal government as part of the 2015 FAST Act – with the promise of further infrastructure spending receiving bipartisan support in Congress and forming a key part of President Trump's election campaign.

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US cement news Heidelberg Cement news