All the pieces are in place to trigger a multiyear increase in demand for portland cement:

Steady increase in job creation. Consumer debt at a 35-year low. More people are buying homes despite slightly higher interest rates. More importantly, housing starts—the primary use of concrete in the residential marketshould be up 18% and continue at double-digit levels for several years (see chart below).

Meanwhile, on the investment side, profits are strong. Companies have cash reserves and banks are lending. That, too, represents an unprecedented level of pent-up demand. When it’s released, commercial construction activity will be further supplemented by “intensity gain;” i.e., the amount of concrete used in a project will increase.

Though marginal, state and local governments have to start fixing the roads they’ve put off repairing for so long (see chart). More significantly, DOTs using lifecycle cost analysis see that concrete costs less than asphalt for both new roads and overlays. That alone could increase demand by 2 million metric tons whether or not the MAP-21 federal highway legislation is reauthorized in September.

It all adds up to an 8% increase in consumption over 2013 (see chart) and 90% operating rates by the end of 2014.

The big unknown is Congress. Every time in the recent past that there’ve been hints of renewed growth, something like the federal debt crisis or healthcare debate squashes momentum. Legislative stonewalling lowers GDP by up to half a percent. However, Portland Cement Association (Booth C4213) Chief Economist Ed Sullivan’s annual World of Concrete forecast takes this into account. His prediction: 3% GDP.

“It’s not rah-rah but solid compared to what we’ve been through,” he says to the 35,000 whose livelihood depends on portland cement. “All the engines of construction activity are beating positively.”

Credit: Abbinante, Anna

Credit: Abbinante, Anna

Credit: Abbinante, Anna