The United States is the richest country in the world and the fourth most populous. Although the cement industry in the United States has experienced many hardships, its development is still relatively strong.
As we all know, the United States suffered a financial crisis in 2008, and the economic downturn will certainly cause a heavy blow to its cement industry, until now, the cement industry in the United States is still gradually recovering.
However, the unexpected cold winter weather in early 2014 delayed the recovery of the U.S. economy, which grew by only -2.9% in the first quarter, the worst quarterly performance since 2009. Cement consumption in the United States rose 4.5% despite the bad weather. In addition, since the second quarter, a number of economic data have improved, indicating that the U.S. economic recovery will be back on track. As a result, the Portland Cement Association (PCA) expects record growth in the construction industry in the United States in 2014. US cement consumption is expected to rise 7.9% in 2014 and 10% per year in 2015 and 2016.
Overview of cement industry in the United States:
The cement industry in the United States began in the Caspian Valley of Pennsylvania in the mid-19th century. As cement production expanded across the United States, a variety of batch or continuous shaft kilns began to be used in the United States. In 1902, the American Portland Cement Manufacturers Association (AAPCM) was formed to defend the interests of the cement industry and was renamed the Portland Cement Association (PCA) in 1916.
Currently, cement producers in the United States include Ash Grove Cement, Eagle Materials, and Texas Industries. And the international cement giants Lafarge, Holcim, Cemex, HeidelbergCement (which operates in the US through Caspian Cement) and Buzzi Unicem. These companies account for 49% of the total cement production capacity in the United States. But that share is falling as new cement companies, such as Cementos Argos, enter the US market.
In 2013, 98 cement plants in 34 States produced 75.1 million tons of cement, according to the USGS. At the same time, apparent cement consumption in the United States (see Editor's Note) is greater than cement production. Therefore, the United States needs to import cement. It is reported that the United States mainly imports cement from Canada, South Korea, China and Mexico. In 2012, the main consumers of cement included ready-mixed concrete manufacturers (70%), concrete product manufacturers (11%), contractors (9%), oil and gas wells (8%), building materials dealers (3%) and other users (2%). In 2012, the cement industry in the United States had sales of $7.6 billion, and the top five cement producing States were Texas, Missouri, California, Michigan and Florida. Growth in the US cement industry has been flat since 2012.
The cement industry in the United States has been affected by local economic activity since its inception. From 1900 to 1929, the output and apparent consumption of cement in the United States increased, but the Great Depression suffered by the United States at that time caused the development of many industries to be in danger. It was not until after the Second World War that the cement industry in the United States had a long and sustained growth; However, in the 1980s and 1990s, the cement industry in the United States was further affected by the recession; from 1993 to 2006, the cement industry in the United States grew, but many industries were affected by the Great Recession at that time. Since then, the cement industry in the United States has not yet recovered, cement production and apparent consumption continue to be depressed (see Figure 1), and fewer new projects have been started.
Nevertheless, cement industry experts remain optimistic about the future of the U.S. cement industry. PCA predicts that the cement industry in the United States will grow in the long run. PCA believes that the current slow recovery of the cement industry in the United States is mainly due to the lack of consumer confidence and the slow recovery of the construction industry.
"Consumer and business confidence is the key to faster economic growth," said Ed Sullivan, vice president and associate economist at PCA. However, the closure of the federal government in the United States from October 1 to 16, 2013 had a huge negative impact on consumer and business confidence.
Figure 1 : Cement data in the United States from 2000 to 2013:
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Cement plants in the United States:
There are 96 integrated cement plants in the United States, with an annual cement production capacity of nearly 115 million tons. Cementos Argos from Colombia became the ninth largest cement producer in the United States in terms of annual cement production capacity through a series of acquisitions (see Table 1). Eagle Materials, with 3.3 million tons of annual cement capacity, just dropped out of the top 10 U.S. cement producers.
In 2012, Texas had 11 cement plants, the largest cement capacity of any state in the United States (see Table 2). In addition, California, Missouri, Florida and Pennsylvania ranked second to fifth in cement production capacity.
Table 1 : Top 10 cement producers in the United States
Table 2 : Top 10 Cement Producing States in the United States
Major asset acquisitions and sales activities in the U.S. cement industry in 2014:
In December 2013, Saint-Gobain reached an agreement with Plycem in the United States to sell its fiber cement board business in the United States to Plycem. The sale is expected to be completed in 2014. It is reported that the business is Saint-Gobain's external products business, which manufactures and sells fiber cement panels and ancillary products for residential and commercial construction markets in the United States and Canada. In addition, the business has three production sites in the United States in Roaring River, North Carolina, Terre Haute, Indiana and Oregon.
In January 2014, Colombia's Cementos Argos announced an agreement with Vulcan Materials to acquire Vulcan Materials' cement, concrete, block and port assets in Florida for $720 million. As the acquired assets include the Thomson S Baker cement plant in Florida (with an annual cement capacity of 1.54 million tons) and the grinding plants in Tampa and Manatee Port (with a combined annual cement capacity of 1.9 million tons), These assets will increase the total annual cement production capacity of Cementos Argos by about 3.5 to 20 million tons. It is reported that the transaction ended on March 10, 2014. "We plan to double our cement capacity in the U.S.," said Jorge Mario Velasquez, chief executive of Cementos Argos. "We expect Florida's growth over the next few years to be double that of the U.S. as a whole."
In January 2014, Martin Marietta, a specialist in aggregates and composites, agreed to acquire Texas Industries, a company with annual cement production capacity of 7.02 million tons in Texas and California, for $2.7 billion. It also has a number of ready-mix concrete plants. "We are interested in the Texas market and this acquisition strengthens our position in the Dallas-Fort Worth area," said C Howard Nye, CEO of Martin Marietta. In the long run, Texas is one of the most dynamic markets in the United States.
In addition, in January 2014, with regulatory approval, Lafarge announced the sale of five aggregate quarries and related assets in Maryland to Bluegrass Materials for $320 million. Through the divestiture of these assets, Lafarge has basically completed its repositioning in the US market. At present, Lafarge's business network is mainly distributed in the Great Lakes and Mississippi River regions, including seven integrated cement plants with an annual cement production capacity of 7.59 million tons and two grinding plants.
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US cement data for 2014 :
In January 2014, shipments of Portland and blended cement in the United States and Puerto Rico were 4.9 million tons, up slightly from the same period last year; clinker production was nearly 4.6 million tons, up nearly 7% year-on-year; masonry cement shipments totaled 146,000 tons, up 4% year-on-year; The import volume of cement and clinker is about 407 thousand tons, down 12% year on year.
In February 2014, cement shipments from the United States and Puerto Rico reached 4.7 million tons, up slightly from the same period last year; clinker production totaled 4 million tons, up nearly 5% year-on-year; masonry cement shipments rose nearly 3% year-on-year to 134,000 tons; cement and clinker imports totaled 386,000 tons, up about 22% year-on-year.
In March 2014, shipments of Portland cement and blended cement in the United States and Puerto Rico totaled 6.1 million tons, up nearly 6% from the same period last year; clinker production was 5.7 million tons, little changed from the same period last year; and masonry cement shipments were about 178,000 tons, up 9% from the same period last year. Imports of cement and clinker reached 464 thousand tons, an increase of 5% over the same period last year.
In April 2014, the total shipments of Portland and blended cement in the United States and Puerto Rico reached 7.4 million tons, up about 11% year-on-year; clinker production reached 5.7 million tons, up nearly 3% year-on-year; the shipments of masonry cement increased by about 11% year-on-year to 203,000 tons; the imports of cement and clinker were 545,000 tons, down nearly 15% year-on-year.
Table 3 : Cement data from January to April 2014:
From January to April 2014, the total cement shipment volume of the United States and Puerto Rico was 23.1 million tons, with a year-on-year increase of nearly 6%; the total clinker output was 20 million tons, with a year-on-year increase of about 4%; the total masonry cement shipment volume was 664,000 tons, with a year-on-year increase of nearly 7%; the total cement and clinker import volume was 1.8 million tons, with a year-on-year decrease of 3%.
Outlook:
According to the latest forecast of the International Monetary Fund (IMF), the gross domestic product (GDP) of the United States will grow by 2.8% in 2014 and 3.0% in 2015. However, the recovery of the cement industry in the United States lags far behind the recovery of its economy, so it will take several more years for the cement industry in the United States to keep pace with the economy.
In the short term, the PCA expects record construction growth in the United States in 2014, with half of the growth expected to come from residential construction. It is reported that since the recession, the residential construction sector has the highest demand growth; in addition, the commercial sector will also contribute 25% to the construction industry. Usually, when the residential sector and the commercial sector bring growth to the construction industry at the same time, the consumption of cement will increase substantially.
In the long term, PCA has forecast that cement consumption in the United States will grow by 9.7% in 2014 and 2015, reaching 86 million tons in 2014. Ed Sullivan, PCA's chief economist, said: "In 2013, PCA had predicted that cement consumption in the United States would grow, and two-thirds of that would come from the residential construction market." Ed Sullivan also said, "Residential inventory is falling, which means it's time to start building homes.". At the same time, credit damage from home foreclosures has caused demand for homes to soar. Sullivan expects that from 2016, the increase in spending on public construction in the United States will contribute to the increase in cement consumption in the United States. Cement consumption in the United States is expected to rise by 11% in 2016 due to the high use of cement in road construction. In addition, PCA expects cement consumption in the United States to reach 119 million tons by 2018.
Meanwhile, the cement industry in Florida and Texas has maintained strong momentum, with recent trends showing an increase in plant acquisitions and upgrades in both States. In addition, Maryland, one of the most densely populated States in the United States, has seen an increase in construction projects and further development of its cement industry. Those in the know, perhaps including Cementos Argos CEO Jorge Mario Velasquez, would be wise to consider investing in these States in the short term.
Editor's note : Apparent consumption is the current year's production plus net imports (imports minus exports) plus inventory changes (inventory at the beginning of the year minus inventory at the end of the year).
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