1. Ed Sullivan, Chief Economist PCA
Cement Outlook:
World of Concrete
February 2010
Ed Sullivan, Chief Economist PCA
Named Most Accurate Forecaster By Chicago Federal Reserve, 2009

2. Portland Cement Consumption Thousand Metric Tons
Growth Rates
2007: - 9.6
2008:
2009:
2010:
2011:
2012:
2013:
2014:
- 54 MMT =

3. Net Capacity Expansion: Delayed
Thousand Metric Tons
The Recession has resulted in commissioning delays and potentially cancelation of expansions

4. Portland Cement : Imports Thousand Metric Tons
Import Tons
2007: 22,729
2008: 11,295
2009: 7,069
2010: 5,700
2011:5,700
2012: 5,700
2013: 7,000
2014: 12,700
Off-Shore Imports
Structural Imports =
First to Cut, Last to Recover

5. Portland Cement : Inventory Conditions Days Supply Estimate
2007: 14
2008: 18
2009: 28
2010: 28
2011:20
2012: 17
2013: 17
2014: 17 =
Delayed Builds, First to Improve

6. Portland Cement : Utilization Rates Percent Utilization Based on Clinker Capacity
2007: 91.6%
2008: 84.4%
2009: 60.3%
2010: 64.4%
2011: 72.5%
2012: 78.4%
2013: 86.9%
2014: 89.8% =
Slow Demand Improvement, Digestion of New Capacity & Inventory Reductions Will Delay Utilization Recovery

7. The recession is over…BUT…not for you
Economic Outlook
The recession is over…BUT…not for you

8. Economic Adversity Abates Mid-2010
2006
2007
2008
2009
2010
Sub-Prime
Energy
Financial
Crisis
Labor Markets
State Deficits

9. “Stimulus Timeline Phase I Phase II Phase III 2011 2009 2010
Policy Tool
Objective
2009
2010
2011
Job Saving
Job Creating
Tax Cuts, Entitlement Spending, State Aid
Stabilize Economy, halt adverse momentum
Phase I
Shovel Ready Projects
Job Creation
Phase II
Job Creation, Address Structural Economic Issues
Long Term Investments
Phase III

10. Job Recovery: Past Recessions - Change, Thousands of Jobs
Current Recession

11. Ingredients for a “Recovery”

12. Ingredients for a “Recovery”
This Implies continued weak consumption levels during first half of 2010
Cement Consumption: + 5.2% 2010
PCA’s 5.2% growth in 2010 translates into 4 MMT.
This “recovery” must be considered in the context of a 54 MMT peak-trough decline.
Residential
Public
Late 2010 Recovery in Starts.
ARRA continues to accelerate. Cement projects materialize 2nd half 2010

13. Portland Cement Consumption Annual Change, Thousand Metric Tons=
Residential
Nonresidential
Public

14. Ingredients for a Housing Recovery

15. Residential Cement Consumption Thousand Metric Tons
MMT
Residential sector’s adverse impact on cement consumption has run its course. =
55% of Total Cement Consumption decline is attributed to residential

16. Ingredients for a Starts Recovery
Homebuilders Expected ROI
Inventory no higher than 5 months supply
Price stability
Weaker the price increases…lower the months supply trigger point.
Carry costs erode expected ROI.

17. Foreclosures Accelerate
Foreclosure Impacts
Add to Inventory
Depressed HomebuilderROI
Depress Prices
2.8 Foreclosures in 2009.
871K Bank possessions.
Equates to one out of every 5 homes on the market.
Adds supply.
Bank owned properties discounted.
Pressures new home prices.
Longer carry costs.
Lower revenues.
Erodes expected ROI.
Delays recovery in starts.

18. Reasons to Bridle Current Optimism
Slow labor market recovery.
Potential payback from federal homebuyers tax credit.
Increased foreclosures.
Heightened price pressures from bank possessed properties.
Continued tight lending standards.
Potential for interest rate increases.

19. Ingredients for a Public Recovery

20. Portland Cement Consumption: Public Annual Change, Thousand Metric Tons
Recovery Begins 2010 =

21. Ingredients for a Public Cement Recovery
Highway/Street Cement Consumption
2009: 0.6 MMT
Aaa A
Aaa A
2009: -5.4 MMT
ARRA Stimulus
State Fiscal Sterilization
2010: 7.5 MMT
2010:-0.7 MMT
Outlays accelerating. Design & concrete intensive projects roll out last.
Decline in discretionary state cement consumption have been massive during past three years.

22. ARRA-Led Recovery

23. ARRA – Weekly Highway Construction Spending - Dollars (Trend – No Seasonal Consideration)
Higher Outlays Realized in 2010
Money Released Before 2009 Peak Construction Season Ends

24. ARRA Cement Intensities Increase
2009
2010
2011
2012
Pavement Improvement & Rehab
Low / No Cement Intensity
New Route & Widening
Moderate to High Cement Intensity
New Bridge, Improvement & Reconstruction
High Cement Intensity
Total ARRA Cement Consumption
0.6 MMT
7.6 MMT
7.4 MMT
0.4 MMT

25. Sterilization by State Fiscal Conditions
State Sterilization
Sterilization by State Fiscal Conditions

26. FY2009 State Deficits Deficit % Share of Budget No Deficit 0-10%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 KY WV VA NC MD DE PA NY CT NJ HI
No Deficit
0-10%
11%-20%
21% +
Source: PCA, Center on Budget and Policy Priorities, June 2009

27. FY2010 State Deficits Deficit % Share of Budget No Deficit 0-10%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 KY WV VA NC MD DE PA NY CT NJ HI
No Deficit
0-10%
11%-20%
21% +
Source: PCA, Center on Budget and Policy Priorities, June 2009

28. Job Losses Generate Deficits –Pushing Discretionary Spending Down
Discretionary State & Local Highway/Street Spending - Millions of Real $ (estimated)
Job Losses Generate Deficits –Pushing Discretionary Spending Down
State Discretionary Highway Spending Will Act as a Powerful Drag on Total Highway Construction Activity in

29. PCA’s outlook suggests only modest further erosion for 2010
Portland Cement Consumption: State Discretionary Annual Change, Thousand Metric Tons =
11 MMT Decline during
PCA’s outlook suggests only modest further erosion for 2010

30. New Highway Bill

31. SAFETEA-LU versus New Highway Bill Assumptions

32. Public Summary

33. Portland Cement Consumption: Highway Thousand Metric Tons=
State
Discretionary
Highway Bill
Stimulus

34. After the Crisis

35. Portland Cement Consumption Thousand Metric Tons
- 54 MMT =

36. Cement Consumption: Long Term
Million Metric Tons
Growth in Context of Population Changes, Slower US Economic Growth, Strong Global Growth, Climate Change Legislation and the “Green” Revolution.

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

38. Real-Time Construction Data & Analysis
Easy-to-use Dashboard by
PCA’s award winning economics team.
Forecasts & analysis
Presentations and Webcasts
Historical Data
Familiar Excel format
Downloaded in real-time!
Subscribe at

39. Ed Sullivan, Chief Economist PCA
Cement Outlook:
World of Concrete
February 2010
Ed Sullivan, Chief Economist PCA
Named Most Accurate Forecaster By Chicago Federal Reserve, 2009