Cement consumption to decline in 2023 for the first time in 13 years
By Jenny LescohierOctober 19, 2022
For the first time in 13 years, the Portland Cement Association (PCA) is predicting cement consumption to decline as the U.S. economy struggles against rampant inflation and resulting rising interest rates.
According to media reports, the PCA’s fall cement consumption forecast for the U.S. market projects a “near-term demand decline of 3.5%” for 2023. Growth is expected to return in 2024 and beyond, however.
Edward J. Sullivan, chief economist and senior vice president for the PCA, points to inflation and rising interest rates as the driving forces behind the drop in demand, as well as unemployment at 4.7%.
“Inflation is expected to remain high, leading to further monetary policy tightening through this year and into early next,” he was quoted.
This is in stark contrast to last year, when residential cement consumption accounted for nearly 80% of growth in cement demand. Rising mortgage rates combined with skyrocketing home prices have since weakened housing starts, which are predicted to decline nearly 13% next year.
The story for nonresidential construction is similar, where several sectors have yet to recover from the effects of the Covid-19 pandemic.
The PCA’s forecast shows infrastructure funding providing some relief in the long run, however near-term effects will be minimal due to the lag 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.
For perspective on cement consumption, looking back we see the pandemic affected consumption significantly. A total of 104,025 metric tons of Portland and masonry cement were used in 2020 and grew 4.2% in 2021 to 108,472 metric tons.
Currently, a 0.3% change is expected for 2022, bringing consumption to 108,735 metric tons, while 2023 consumption is predicted to drop 3.5% lower to 104,901 metric tons.
Reports show proceeding years as follows:
- 2024: 106,979 metric tons (4.2% increase)
- 2025: 111,081 metric tons (3.8% increase)
- 2026: 115,247 metric tons (3.7% increase)
- 2027: 119,428 metric tons (3.6% increase)