Portland Cement Association United States’ Cement Outlook Ed Sullivan, SVP Chief Economist August 2016 I Intercontinental HoteI Magnificent Mile, Chicago

Cement Consumption Thousand Metric Ton SAAR 7 Models: Range 4.62% to 2.87% On-Line Survey suggests lower end. Call arounds suggests more optimism.

Portland Cement Consumption Thousand Metric Tons Summer 2014 = 8.7% 2015 = 3.7% 2016 = 3.9% 2017 = 4.2% =

Economic Trends a Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB

Labor Markets Remain Strong Net Job Creation Thousand Workers Net Job Creation Annual, Thousands

Unemployment Normal Definition, U-6 Unemployment Rate

Wealth & Sentiment Ease Consumer Sentiment Index University of Michigan, Composite Average Home Price

a

Fixed Investment Energy Sector Weighs on Investment Y-O-Y % Change Fixed Investment Drag On GDP Y-O-Y % Change

Oil Price Outlook EIA, August Short Term 83% Increase.

Government Spending Y-O-Y Growth Rate S & L : Accounts for 62.5% of Total Government Spending

Value of the Dollar Broad Composite Net Exports Annual Drag

Inventory-to-Sales Ratio Inventory Changes Inventory Changes Inventory-to-Sales Ratio

Monthly Inflation Rate Percent Change, CPUI Interest Rates Monthly Inflation Rate Percent Change, CPUI Federal Funds Rate

Real GDP Growth Rate % Change

Manufacturing, Oil, and Agg Exposure ME RI MA VT NH AL GA SC TN FL MS LA TX OK NM KS MN IA MO AR WY CO ND SD NE WA ID MT OR NV UT AZ CA WI IL IN MI OH WV VA NC MD DE PA NY CT NJ KY Manufacturing Energy Energy & Agriculture Manufacturing & Agriculture

Housing Outlook a Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB

a Housing Outlook Low mortgage rates, job gains help in affordability despite strong gains in home prices. Millennials burdened by debt, forming households and families later and not as accepting that homeownership a safe bet for asset accumulation, are slow to enter the new SF market. Low inventories, rising prices should provide incentive to accelerate building. Skilled workers left the construction workforce and the pipeline is slow to replenish. Reduces starts by as much as 100,000 annually. PCA takes a conservative position. Upside risks.

Single Family Starts Thousands Multi Family Starts Thousands Housing Starts Single Family Starts Thousands Multi Family Starts Thousands

Potential Housing Risks Single Family Starts Multi Family Starts Total Starts 2016 2017 2018 Starts, Units PCA 793 869 944 392 393 394 1,185 1,262 1,338 NAHB 888 992 386 372 1,179 1,280 1,364 MBA 825 954 1,050 391 405 400 1,216 1,359 1,450 Fannie Mae 794 909 --- 404 428 1,198 1,337 Difference From PCA, Units 19 48 -6 -1 -22 18 26 32 85 106 12 6 31 97 112 1 40 35 13 75 Implied Tonnage Risks, Thousand Metric Tons 409 1,032 -51 -9 -187 845 688 1,828 2,279 102 51 680 1,930 2,330 22 860 298 124 1,158

Nonresidential Outlook Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB

Nonresidential Outlook Percent Change on Real 2009 $ 2015 2016 2017 2018 2019 2020 2021 Nonresidential Buildings 17.1% 4.8% 3.3% 3.2% Industrial 30.8% -7.5% 0.2% 2.1% 2.6% 2.7% Office 17.2% 14.0% 5.6% 4.4% 4.0% 3.6% Hotels, Motels 25.5% 20.3% 6.1% 3.1% 2.5% Hospitals, Institutions 10.0% 2.8% 3.7% 3.9% 3.5% Religious 4.7% 1.5% 1.2% 1.1% 1.4% Educational 0.1% 4.3% 3.4% 2.9% 3.0% Other Commercial 7.8% 8.4% Public Utility & Other -9.6% 2.3% 1.7% 1.6% 2.0% Farm Nonresidential -3.9% -4.5% -2.3% -0.6% 0.0% Miscellaneous -1.4% -0.5% 2.2%

Cement Consumption: All Buildings Metric Tons (000s) Actual and Projected Volumes Source: PCA

Relative Lumber Price Scenarios (Lumber PPI/Concrete PPI: Base Year = 2002) Relative Price is the change in a material’s PPI compared to that of concrete’s. An upward trending line indicates an increase in concrete’s competitive price position.

Cement Consumption: All Buildings Metric Tons (000s) Volume Lost to Market Share Erosion Actual and Projected Volumes Source: PCA

Tonnage Risks: 2016-2040 Metric Tons of Cement Consumed Source: PCA

Public Outlook Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB

Public Construction Million Real $ Fall 2014 = -1.1% 2015 = +3.8% 2016 = +2.8% 2017 = +2.3% =

Conclusions Presentation Summary of Results Comparative Life Cycle Analysis Research Building Materials Single Family, Multi Family, and Commercial Structures Done By MIT Concrete Sustainability HUB

Portland Cement Consumption Thousand Metric Tons Summer 2014 = 8.7% 2015 = 3.7% 2016 = 3.9% 2017 = 4.2% =

Composition of Changes in Cement Consumption 2016 2017 Public, 43% Public, 43% Other: Utilities, Energy, Agriculture, & Mining

Imports Are More Attractive Value of the Dollar Broad Composite Baltic Dry Index

Import Share Gains 2020: 20.0% 2017: 16.4% 2015: 10.9% = Percentages are Imports Market Share

Portland Cement Association United States’ Cement Outlook Ed Sullivan, SVP Chief Economist August 2016 I Intercontinental HoteI Magnificent Mile, Chicago