Connect With Concrete Cement Outlook: Ed Sullivan, Chief Economist PCA Electric Power Conference

Connect With Concrete Introduction: Overview  Economic fundamentals are weak.  Private Sector no longer drives demand  Residential & Nonresidential recoveries are not expected to materialize anytime soon.  Outlook shaped by policy actions.

Connect With Concrete Portland Cement Consumption Thousand Metric Tons - 45MMT

Connect With Concrete Capacity Expansion Thousand Metric Tons Stated Capacity Expansions Potential Increases From Specification Changes

Connect With Concrete Market Imbalances - Changes in Cement Consumption Tons + Capacity Expansion Tons

Connect With Concrete Import Volume Thousand Metric Tons

Connect With Concrete Introduction: Conclusions  Stimulus will provide some relief….  …but hardship facing the industry will not be avoided…  Further plant actions may materialize in the context of market imbalances.

Connect With Concrete After the Economic Crisis

Connect With Concrete After the Crisis  Cyclical correction is temporary.

Connect With Concrete  Stimulus spending must be paid for…resulting in higher interest rates, higher taxes and potentially higher inflation….  …and…American consumer..the engine of US economic growth may show significantly different spending patterns…  …combining for the potential of slower longer term economic growth (50 basis points).  …But even with these gains…past cyclical peaks are not expected to materialize until After the Crisis

Connect With Concrete Job Recovery: Past Recessions - Change, Thousands of Jobs Recession Recession Recession Current Recession

Connect With Concrete 000 Starts Single Family Housing– United States Pent-Up Demand Interest Rates low, Decline in Home Price, Job Recovery Translate into Improved Affordability Excess Inventories Worked Off

Connect With Concrete After the Crisis  Once recovery is in place….  And despite payback costs for stimulus…  Concrete construction could record large and sustained gains in growth.

Connect With Concrete Capacity Utilization Rates Clinker Production/Clinker Capacity Includes Plant Shutdowns. All Shutdowns Assumed Permanent. Downside Risk in Out Years….Reducing Utilization Rates as much a 50 Basis Points.

Connect With Concrete Implications Market Imbalances

Connect With Concrete Portland Cement Consumption Thousand Metric Tons

Connect With Concrete Nuclear Power: Assumptions  Cement Consumption Per Plant  115,000 (low) to 130,000 (high) Metric Tons Per Plant  How Many Plants  28 licenses to build.  3 (low) to 5 (high) Plants Built Through When.  First Plant: Scheduled 2016  First Pour = 2013 (Implies a three year lag to start-up)  One every eighteen months on-line thereafter through Implies.  57,500 (low) to 130,000 (high) Metric Tons of Cement Annually

Connect With Concrete U.S. Supply Balance: No New Capacity Expansion Plans Million Metric Tons Cement Consumption Imports: 25.6 MMT Cement Production

Connect With Concrete Estimated U.S. Cement Clinker Capacity by Scenario Million Metric Tons

Connect With Concrete U.S. Supply Balance: EPA Mercury Impacts Million Metric Tons Cement Consumption Imports: 41.8 MMT Cement Production EPA: Hg Impact

Connect With Concrete Climate Change: Accelerated Decline of Wet Kilns Million Metric Tons

Connect With Concrete U.S. Supply Balance: No New Capacity Expansion Plans Million Metric Tons Cement Consumption Imports:59 MMT Cement Production

Connect With Concrete Cement Outlook: Ed Sullivan, Chief Economist PCA Spring Board/Committee Meeting