Is there a cement and concrete shortage in the U.S. in 2022 and when could things get better? Keep reading to find out.
There are supply chain issues in the cement industry.
The COVID-19 pandemic has been a supply chain nightmare for many industries, and cement hasn't been an exception. Like with many other industries, while the demand for cement rebounded, the supply side struggled to keep pace.
According to the PCA (Portland Cement Association), which is a group in the American cement industry, several factors are hampering cement’s supply chain in the country. First, the demand has been strong, which is reflected by the boom in residential and commercial construction activity.
The PCA also listed production cutbacks and maintenance delays during the pandemic for disrupting the supply chain. Negative weather conditions, low inventories, and labor shortages added to the strain on the supply chain. Like with other goods, a shortage of drivers means that whatever cement plants produce took longer than usual to reach consumers.
U.S. cement demand is expected to be strong.
In its report, the PCA said that it expects U.S. cement demand to rise 2.7 percent in 2022 and then slow to 1.1 percent in 2023. However, the forecast doesn't include any bump from higher government spending on infrastructure because the bill passed after the report. It also said that 17 cement plants in the country are up for labor negotiation in 2022. Any labor issues at these plants will add to the demand-supply mismatch.
Once the infrastructure spending starts to gain steam, it will increase the demand for cement and concrete.
What are the major cement producers in the U.S.?
LafargeHolcim is the largest cement producer in the U.S. In its earnings call for the fourth quarter of 2021, the company said that the performance of its North America business was “outstanding” in 2021. The company saw particularly strong demand in the fourth quarter. However, LafargeHolcim didn't mention the shortage of cement or concrete in the region and it wasn't featured during analysts’ questions.
Cemex, Lehigh Hanson, Buzzi Unicem, and Ash Grove Cement are among the other major cement producers in the U.S. Cement is the key raw material for producing concrete and most of the cement finds its way into concrete.
How severe is the cement shortage in the U.S.?
While there isn't a major nationwide shortage of cement, there are pockets where cement has been in short supply. For example, some contractors in Texas have faced a cement shortage.
Things should get somewhat better in the second half of 2022. As the U.S. economy cools down after the strong growth in 2022, cement demand, which is highly correlated to GDP growth, should also taper down. Also, as the labor force availability increases, cement supply should get a boost.