In a first decline projection in 13 years, the Portland Cement Association (PCA) fall cement consumption forecast for the U.S. market projects a "near-term demand decline of 3.5%" for next year. However, growth is expected to return in 2024 and beyond. The PCA provides a cement consumption forecast three times annually.
Edward J. Sullivan, PCA Chief Economist and Senior Vice President sees the decline due to inflation and rising interest rates. Pointing out that unemployment reaching 4.7%, he expects economic growth be "sluggish" through mid-2023. "Inflation is expected to remain high, leading to further monetary policy tightening through this year and into early next," he says.
Residential cement consumption accounted for nearly 80% of growth in the demand for cement in 2021. This year, rising mortgage rates coupled with double-digit gains in home prices has resulted in a weakening in housing starts – a nearly 13% decline is expected in 2023.
Nonresidential construction is also expected to weaken. Several sectors have not recovered from Covid-induced downturns in nonresidential construction. “Easing economic conditions typically result in higher vacancy rates and soft leasing rates,” says Sullivan. But, he expects that nonresidential construction will add to the declines originating from the residential sector.
Despite the funding plans, even the infrastructure isn't expected to be immune to the recession. The PCA's forecast expects the national infrastructure program to provide "some" relief in the private section of construction, the near-term influence should be modest considering the time between spending and the placement of concrete.
In 2024, PCA expects a modest recovery as interest rates begin to ease and a more significant impact is felt from the infrastructure bill.
Noteable Figures
The Covid pandemic affected the consumption of cement hard, 104,025 metric tons of portland and masonry cement were used in 2020. This grew 4.2% in 2021 (to 108,472 metric tons). At current, while we see a 0.3% change for 2022's projection of consumed cement (108,735 metric tons), the decrease in consumed cement is expected to be -3.5% (104,901 metric tons).
However, the following years seem to be holding the silver lining that we're all looking for. Consumption is expected to grow beyond 2022's levels and then increase a bit every year afterward.
- 2022: 106,304 metric tons (a 0.3% increase from 2021)
- 2023: 102,583 metric tons (a -3.5% decline)
- 2024: 106,979 metric tons (a 4.2% increase)
- 2025: 111,081 metric tons (a 3.8% increase)
- 2026: 115,247 metric tons (a 3.7% increase)
- 2027: 119,428 metric tons (a 3.6% increase)
Data by Portland Cement Association
