Economist predicts worsening cement shortage, higher prices in 2006

Cement prices will not decrease and will in fact rise 10 to 15 percent in 2006, with even more widespread shortages than in 2005, according to Ken Simonson, chief economist for the Associated General Contractors of America.

Prices for cement and concrete products rose 10 to 12 percent from September 2004 to September 2005. U.S. cement production increased 2 percent in 2004 but consumption increased by 7 percent, making the U.S. dependant on imports. While there are adequate supplies worldwide, transport costs are high and hurricanes Katrina, Rita and Wilma combined to disrupt deliveries to four of the top five import regions for cement. Domestically, cement plants take several years to complete and there is not likely to be much additional production in 2006, Simonson said.

While the cement shortage will continue, demand for nonresidential building, highway and water infrastructure construction is likely to increase, worsening demand next year.

One cement producer, Lafarge North America, has already announced a price increase of $10 per ton of concrete will become effective Jan. 1. Lafarge and other U.S. producers say a 55 percent anti-dumping duty on Mexican cement has resulted in shortages and high prices all along the U.S. distribution chain, the Wall Street Journal reported.