Cement shortages continue; hurricanes worsen scarcity in Florida

Cement shortages that started hitting states like Florida and California in the spring have continued into early fall and could persist through the end of the year, according to the Portland Cement Association.

Approximately 29 states around the country, mostly in the Southwest, South and the Mid-Atlantic, have experienced some kind of cement shortage over the past six months. States including Florida, California, Pennsylvania, New Jersey, Delaware, Georgia, and North and South Carolina have been hit the hardest by the scarcity.

“These states rely on cement imports which are not readily available in the current marketplace,” said John Ernst, an assurance senior manager with the construction business advisory firm Grant Thornton.

During the summer months, according to PCA, Georgia and the Carolinas had an unusual amount of rain, which eased up some shortages.

Cement shortages have occurred worldwide because of a surge in demand led by the construction boom in China. Because freight ships are tied up carrying goods to China, get the cement available in South America and Southeast Asia to the rest of the world has been difficult. The result of the high demand is that prices have skyrocketed and both residential and commercial construction have slowed in some areas of the United States.

“There is not enough supply to meet that demand, so the Chinese are importing more building materials and, in doing so, they are tying up global shipping lines that would typically be used to import cement into the United States from Colombia, Thailand and China,” Ernst said.

Will the cement shortages continue in the near future? For Florida, the answer is most likely, yes. The state was already in need of cement because of an extremely high number of housing starts and increased commercial construction. With the onslaught of Hurricanes Charley, Frances and now Ivan, a massive rebuilding effort will demand cement supplies that were already tight. Florida usually imports 40 percent of its cement, but will have to depend more on domestic supplies for reconstruction.

One short-term solution would be to import more cement from areas that would not require sea-borne vessels for shipment. In June, the Associated General Contractors of America called on Secretary of Commerce Donald Evans to temporarily lift tariffs imposed on Mexican cement products to give relief to states desperately needing reasonably priced cement. While a delivery of cement from Asia can take up to six weeks to get to the United States, a delivery from Mexico takes only four days.

“Removing duties on Mexican cement, which have been set at $57 per ton, would provide contractors with an additional source of cement and have a desired effect on spiking prices,” said Stephen Sandherr, chief executive of AGC.

For a long-term solution, cement companies across the nation have aggressively expanded their production operations. Although it does not help the current cement shortage, by 2008 there will be nearly 10 million tons of new capacity, which is an increase of about 11 percent in domestic cement production. Traditionally, 22.6 percent of U.S. cement construction has been done using imported cement, according to PCA.