Cement Industry Overview
Economic Research
> Cement Industry Overview Economics
of the U.S. Cement Industry
Information on aspects of the U.S. cement industry including
imports, exports, ownership, economic cycles, employment, and trends.
(Updated November 2006.)
Introduction
The cement industry is literally the building block of the nation's
construction industry. Very little new construction activity can
be undertaken without the use of cement and concrete. Annual cement
industry shipments are estimated at $13 billion for 2005. U.S. cement
production is widely dispersed with the operation of 115 cement
plants in 36 states. The largest company produces just over 13%
of the industry total, and the top five companies collectively produce
around 56%. Foreign companies now own approximately 81% of U.S.
cement capacity.
Cement Consumption
In 2005, the United States consumed a record 121.3 million metric
tons of Portland cement, reflecting a 5.6% increase over 2004 levels.
Cement consumption was supported by favorable economic conditions
that led to strong construction activity during 2005. Low mortgage
rates propelled housing starts to a record level. Sustained economic
growth lowered vacancy rates and increased leasing rates - improving
the fundamentals for nonresidential construction. Employment gains
increased taxpayer payrolls, resulting in improved fiscal conditions
at the state level and improved public construction activity. All
totaled, inflation-adjusted construction spending was $755 billion
in 2005, a 4.2% increase from 2004 levels and accounted for a 9.2%
share of the national economy.
Approximately 73% of all shipments are sent to ready-mix concrete
operators. Plants shipped 14% of the cement they manufactured to
concrete product manufacturers, 6% to contractors, and 3% to building
material dealers.
Cement consumption is seasonal. Nearly two-thirds of U.S. cement
consumption occurs in the six months between May and October. The
seasonal nature of the industry can result in large swings in cement
and clinker (unfinished raw material) inventories at cement plants
over the course of a year. Cement producers will typically build
up inventories during the winter and ship them during the summer.
The cement industry is also regional in nature. Because the cost
of shipping cement quickly overtakes its value, customers traditionally
purchase cement from local sources. Nearly 98% of U.S. cement is
shipped to consumers by truck. Barge and rail modes account for
the remaining distribution modes.
Imports Fill Production Gap
According to PCA estimates, U.S. cement plants achieved an average
capacity utilization rate of 91.5% in 2005. Even at high operating
rates, domestic production can not satisfy total United States cement
consumption. The gap between domestic production and consumption
was filled in 2005 by 33.7 million metric tons of imported cement
and cement clinker. About 52% of cement and clinker imported in
2005 came from four major countries: China, Canada, Thailand, and
Greece. Imports from China in 2005 surged to 6.6 million metric
tons and surpassed Canada, who historically has been the leading
cement exporter to the United States. Exports of cement seldom exceed
1% of total U.S. production. In 2005, the United States exported
844,689 metric tons of cement to final customers.
Heavy reliance on imports to satisfy market needs subjects the
United States' market to sometimes volatile global economic conditions
regarding the availability of foreign cement and ships used for
importing cement (dry bulk carriers). As a result, the cement industry
is currently engaged aggressive capacity expansion. By 2010 more
than 20 million metric tons of new capacity will come on line, representing
more than $5 billion in investment.
Efficiency Gains
Employment in the U.S. cement industry has declined dramatically
during the past 20 years. In 2005, the cement industry employed
16,859 workers--a 23% reduction compared to 1985 levels. This drop
in employment is the result of industry efforts to increase efficiency
by automating production and closing small kilns. The average kiln
in use today produces nearly 70% more cement than an average kiln
produced 20 years ago: 504,000 metric tons in 2004 compared with
297,000 metric tons in 1984.
The cement industry has boosted efficiency by concentrating new
capital investment in plants that use the dry process of cement
manufacture, and by phasing out operations that rely on the more
energy-intensive wet process. Since 1974, the number of wet process
kilns has dropped from 234 to 52 -- a decline of 78% -- while the
number of dry process kilns has only been reduced from 198 to 134.
Nearly 62% of existing U.S. clinker production capacity has been
built since 1975 -- all utilizing the dry manufacturing process.
Currently, about 83% of the cement produced in the United States
is manufactured using dry process technology.
For More Information
Information and statistics used in this summary are presented in
reports compiled by PCA from various government and private sources.
For additional information of the U.S. and Canadian cement industry,
refer to the Economic and Market Research
pages of our Web site.
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