Portland Cement Association Senior Vice President and Chief Economist Ed Sullivan presented his annual economic forecast, with specific focus on the cement industry and the increasing demand for construction materials accelerated by the Infrastructure Investment and Jobs Act (IIJA).
In particular, Sullivan noted that through November 2021, the U.S. as a whole saw a 3.6% year-over-year growth in cement consumption, largely driven by the residential sector. However, with mortgage rates rising, cement consumption will be driven by non-residential and public works in 2023 and 2024.
During Sullivan’s presentation, he highlighted how the IIJA will bring in $550 billion in new funding. Sullivan said the country is poised to spend $1.2 trillion on new and rehabilitated infrastructure projects, consuming 46 million metric tons of cement over a five-year program. Over a quarter of that amount will go to roads and bridges and resiliency. He anticipates that the average construction start on projects will be in late Q2/mid-2023.
“The IIJA is extremely important to maintain healthy growth rates in cement consumption,” said Sullivan. “Given the timing, significant infrastructure spending will materialize just as higher interest rates slow private sector construction, particularly in housing.”
Below is PCA’s forecast for cement consumption growth through 2026. Sullivan noted several key risks that could impact this forecast, including more aggressive tightening in monetary policy by the Federal Reserve; new COVID-19 strains that are resistant to current protections; and the passage of the Build Back Better bill, which would add 13 million metric tons of cement consumption over 10 years.
Annual Cement Consumption Growth
2020: 2.0%
2021: 3.2%
2022: 2.5%
2023: 1.7%
2024: 3.7%
2025: 2.4%
2026: 2.7%