The Portland Cement Association (PCA) Market Intelligence Group released their Spring 2021 Regional Forecasts for the Northeast, Central, West, and Southeast United States. These forecasts cover cement consumption and real put-in-place construction spending.
As the economy continues to recover from the impacts of the coronavirus, the Pacific and Mountain region’s cement consumption forecasts have been slightly upwardly revised from the Winter release. Some states in the West (Idaho, Utah, and Oregon) have returned to pre-pandemic employment levels. Only California, Nevada, and Hawaii remain subnational in terms of job recovery. The Mountain region is poised to outperform national economic growth while the Pacific region is expected to grow roughly in line with U.S. growth throughout the forecast horizon.
Growth in cement consumption in both regions is expected to be led by the residential sector. Projections note that single-family permits will to grow 7.4 percent and 6.4 percent this year in the Mountain and Pacific regions, respectively. The nonresidential sector has an expectation that it will be a drag on growth for both regions in 2021. Increasingly optimistic state budget projections diminish the likelihood of severe reductions in public construction spending.
PCA’s Spring forecast does not include the effects of any federal infrastructure package. If an infrastructure bill were to pass, it would represent upside risk to public sector volumes toward the back-end of the forecast horizon. All totaled, the expectation is that the Pacific region will be up around 1.1 percent in 2021. The Mountain region, which led growth in 2020 (11.5 percent) on gains in construction spending and cement intensities, is projected to drop slightly (-0.7 percent) before returning to growth rates exceeding the national average.
The Northeast has been hit hard by the COVID-19 pandemic and had some of the most severe responses. Despite this, cement consumption was able to grow 0.6 percent in 2020, largely due to a strong start to the year, and PCA projects a flat growth of 0.1 percent in 2021. The Middle Atlantic was down nearly 3 percent in 2020, however the East North Central and New England were up 1.9 percent and 4 percent, respectively. Following this, 2021 PCA Market Intelligence expects cement consumption in the Northeast to rise by 1.1 percent in 2022. The increases have an even spread over the three Census Divisions with the Middle Atlantic moving up 1 percent, East North Central moving up 1.1 percent, and New England moving up 0.6 percent.
The residential market served as the primary growth engine of 2020 in the Northeast, and this is expected to continue with a projected 5.7 percent growth rate in 2021. The rate of residential growth will lessen after 2021 but remain positive throughout the forecast horizon. Look for the commercial market to further decline in 2021 and 2022, as there have been many business closures and economic scarring owing to the COVID-19 response.
PCA projects that it will begin to recover, as the 2022 forecast is down a slight 0.6 percent before recovery begins in 2023. From 2023 through 2025, the forecast projects that the segment will increase momentum each year and grow through 2025. In the Middle Atlantic, projections show that public cement consumption will decline 2.2 percent in 2021. This is on top of a 1.4 percent decline in 2020. There is an expectation that the Northeast will lag behind national trends in public cement consumption, given state fiscal conditions and the characteristics of the region.
Cement consumption in the South Atlantic Census division will be strong. PCA Market Intelligence expects cement consumption to grow by 6.8 % in 2021 and 2.1% in 2022.
While new home construction will do the heavy lifting, affordability concerns will likely weigh on single-family construction. There is an expectation that demand from home renovation will increase as more owners tap into their home equity to finance larger projects. Warehouse construction will contribute to higher cement consumption. This is as online retailers continue to adopt a “just in case” strategy. However, retail will remain a drag. Office outlook remains uncertain, but most markets in this region have a lower risk profile. Tourist destinations in the region will likely see some recovery as leisure travel resumes.
The expectation is that demand in the East South Central Census division will be positive. New construction will likely remain positive despite affordability concerns. The oil and gas sector in Alabama will likely contribute to the strength as prices climb back from the 2020 low. Demand from the logistics and distribution sector in Tennessee will also drive cement consumption. However, Kentucky will see more investment from the manufacturing industry. As such, consumption is likely to increase by 7.6% in 2021 and 1.9% in 2022.
In the West South Central census division, PCA Market Intelligence expects cement consumption to grow 2.3% in 2021, following a decline of 2.5% last year. The regional decline in 2020 was largely due to a drop in oil-well cement demand. Excluding oil-well cement, construction-related cement consumption grew 2.9% in 2020. The region maintains very strong construction fundamentals given demand from strong in-migration and an expanding tax base. Residential construction is the primary driver of growth. Projections also show slow, but steady, recovery in oil-well cement demand along with continued support from the public sector.
West North Central census division cement demand has an expectation to grow 1.2% in 2021. This is following an expansion of 7.0% in the previous year. The expected growth will largely be because of residential construction–particularly single-family homes. High demand, low inventories and favorable relative affordability suggest residential cement consumption will expand 9% this year. It will more than offset expected declines in commercial cement consumption. The forecast anticipates that public cement consumption will maintain the strong levels of activity experienced last year. The expectation is that demand of cement consumption this year will reach levels not seen since 2006.
About Portland Cement Association
The Portland Cement Association (PCA) began in 1916. It is the premier policy, research, education, and market intelligence organization serving America’s cement manufacturers. PCA members represent over 90% of U.S. cement production capacity and have facilities in all 50 states. The association promotes safety, sustainability, and innovation in all aspects of construction. They also foster continuous improvement in cement manufacturing and distribution, and generally promote economic growth and sound infrastructure investment. For more information, visit www.cement.org.