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 May 2013)
The cement industry is the building block of the nation's construction industry. Few construction projects can take place without utilizing cement somewhere in the design. Annual cement industry shipments are currently estimated at $7.5 billion for 2012; up from $6.6 billion in 2011. U.S. cement production is widely dispersed with the operation of 107 cement plants in 36 states. The top five companies collectively operate 49.6 percent of U.S. clinker capacity with the largest company representing 14.2 percent of all domestic clinker capacity. An estimated 76.7 percent of U.S. clinker capacity is owned by companies headquartered outside of the U.S.
In 2012, the United States consumed 76.7 million metric tons of portland cement, reflecting a 9.1 percent increase over 2011 levels. The economic downturn, resulting from the mortgage foreclosure crisis and subsequent collapse of the U.S. banking system, hit the construction sector particularly hard. Residential construction spending, for instance, declined over 55 percent from 2005 peak levels to 2011 trough levels. While the construction sector is still depressed, 2012 witnessed the first increase in construction activity in seven consecutive years. Fortunately for the cement industry, the extraordinarily long period of sub-trend economic growth and depressed housing market has created a large amount of pent-up demand which will result in strong growth rates in the years to come.
Cement consumption is dependent on the time of year and prevalent weather conditions. 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 majority of all cement shipments, approximately 70 percent, are sent to ready-mix concrete operators. The rest are shipped to manufacturers of concrete related products, contractors, materials dealers, oil well/mining/drilling companies, as well as government entities.
The domestic cement industry is regional in nature. The cost of shipping cement prohibits profitable distribution over long distances. As a result customers traditionally purchase cement from local sources. Nearly 98 percent of U.S. cement is shipped to its customers 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 63 percent in 2012. At this operating rate, domestic production alone does not satisfy total United States cement consumption. The gap between domestic production and consumption was filled in 2012 by over seven million metric tons of imported cement and cement clinker. Over 80 percent of cement and clinker imported in 2012 came from five major countries: China, Canada, Columbia, Mexico, and the Republic of Korea.
Exports of cement exceeded 1 percent of total U.S. production. Nearly all exports service the neighboring Canadian and Caribbean markets.
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. cement industry, refer to the Market Economics pages of our web site.
According to PCA’s Labor-Energy Input study, labor efficiency, measured in cement tons per employee hour, has more than doubled in the past 30 years. This spike in labor efficiency is the result of industry efforts to increase efficiency by automating production and closing small kilns. The average kiln in use today is capable of producing 89.9 percent more clinker than an average kiln produced 20 years ago: 678,000 metric tons in 2012 compared with 357,000 metric tons in 1992.
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 25 -- a decline of 89 percent -- while the number of dry process kilns has only been reduced from 198 to 124. Well over three quarters of existing U.S. clinker production capacity has been built since 1975 -- all utilizing the dry manufacturing process. Currently, about 93 percent of the cement produced in the United States is manufactured using dry process technology.
As cement producers continue to search for alternative fuels, many people wonder what types of fuel can be used in the combustion process.
The average energy input required to make one ton of cement is 4.4 million Btu—the equivalent of about 389 pounds of coal. The U.S. cement industry uses energy equivalent to about 12.6 million tons of coal every year. According to the Energy Information Agency (EIA), U.S. cement production accounts for about 0.26 percent of energy consumption—lower production levels than steel production at 1.1 percent and wood production at 0.7 percent. From the PCA publication: U.S. and Canadian Labor-Energy Input Survey 2012, the cement industry has improved energy efficiency by over 41 percent from 1972.
Finding ways to reduce both energy needs and reliance on fossil fuels is a top priority for cement companies. Although coal, petroleum coke, and other fossil fuels have been traditionally burned in cement kilns, many cement companies have turned to energy-rich alternative fuels. Today, many plants use a wide variety of alternative fuels as part of their overall energy scheme; ranging from 10 to 70 percent of their energy requirements. Often consumer wastes or byproducts from other industries are efficiently burned as fuel. Recovering their energy value in cement making is a safe and proven form of recycling.
Fuels like coal and coke contain carbon and release larger quantities of heat when they’re burned. Coal and coke, however, aren’t the only fuels that contain carbon. Tires are also a great source of hydrocarbons (carbon and hydrogen). Using tires for combustion in a cement kiln produces 25 percent more energy than coal and it can also result in lower emissions. In fact, any material with high carbon content could be used as a fuel. Paper, packaging, plastics, saw dust, and solvents all are suitable for use as alternative fuels. Because of the extremely high temperatures (well above 3,000 degrees Fahrenheit), these materials burn quickly and extremely efficiently.
Burning alternative fuels in cement kilns offers several environmental benefits. This type of energy recovery conserves valuable fossil fuels for future generations while safely destroying wastes that would otherwise be deposited in landfills. According to the latest Labor-Energy Input Survey, 11 plants used waste oil, 36 plants used tire derived fuel, and 13 plants reported the use of renewable fuels as part of their energy matrix. Solvents, unrecyclable plastics, and other materials are used as well.
The information in this article was taken primarily from PCA’s Labor-Energy Input Survey.
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Innovations in Portland Cement Manufacturing, 2nd Edition, SP400
The definitive resource on all aspects of cement manufacturing addresses the current issues facing the industry. This two-volume, limited edition is a must have reference for personnel involved in the cement industry including production, quality assurance, process engineering, energy issues, health and safety, environmental issues, and analytical techniques.