The summer season of foundation pouring and road building is just beginning to heat up and contractors and concrete suppliers across the country are already reporting delays and looming layoffs due to cement shortages.
The Portland Cement Association estimates cement consumption will increase 3 percent in 2005, reaching a record level of 123.4 million metric tons. Last year PCA reported widespread shortages and “tight” supplies in 35 states, but the shortages occurred later in the year.
“What makes these reports especially alarming is that they are coming at the beginning of the high-demand season for cement, meaning more severe problems are almost certain in the near future,” said Stephen Sandherr, chief executive of the Associated General Contractors of America, which has called on Commerce Secretary Carlos Gutierrez to intervene by suspending the duty on Mexican cement imports.
The issue goes back more than a decade. Ken Simonson, chief economist for AGC, said the Southern Tier Cement Coalition asked the Commerce Department to investigate Cemex, a Mexico-based cement producer, in 1990. The coalition claimed Cemex was “dumping” product in the U.S. market in an attempt to undercut U.S. manufacturers. The Commerce Department agreed and applied an anti-dumping duty to imported cement. Currently the duty is about 80 percent.
“The situation has changed since this decision came down,” said Simonson. “Domestic producers have not been able to keep up with demand and shortages are occurring. As long as we have shortages, local producers are not harmed by imports. Because of this, AGC hopes the Commerce Department will consider reducing the tariff on imports.”
Mexican cement can arrive in days by barge or rail, reducing delays, according to AGC, which reports U.S. cement mills are operating at full capacity and needed expansion is years away.
“We’re on a quota now,” said David Lopez, qualifier for Island Building Supply in Hialeah, Fla. “They’re closing three plants in this area for maintenance for a few months, so supplies here are going to get even tighter. We’re looking outside the U.S. for sources now.”
Those international sources might cost more and prices have already increased significantly in the past year. “The cost of cement powder increased by almost 20 percent from July to December last year, and it has gone up this year too,” Lopez said.
According to a report by Idaho’s KIFI TV station, the cement shortage is squeezing builders in that state as well. “We’re using more than the local cement suppliers can produce,” Mike Horrocks, owner of Pocatello Ready Mix in Pocatello, Idaho, told KIFI. “We’ve always had a glut