All US economists know where to look for any signs of a recovery in the construction and housing markets – they look to Florida. In the past it has been a profitable state if you are a cement producer, but times have swung around full-circle and Florida’s cement manufacturers now have to play a patient game, waiting for cement demand to raise kiln utilisation rates. Rob Roy, ROI Consulting, reports.
Since the 2005 peak, virtually every American state has suffered severely-depressed cement consumption, with four states seeing 2005-11 declines exceeding 60 per cent: Nevada, Florida, Arizona and Georgia.
However, Florida is by far the largest cement market of these four with total 2001-10 cement demand nearly equalling (89.7 per cent) the other three states combined. All of these states were among the victims of the bursting subprime mortgage bubble. Furthermore, Florida’s local cement production capacity had expanded and modernised far more than the other three states. No state had experienced a more radical change in the structure of its cement industry than Florida since 2000.1 The Sunshine state saw clinker capacity more than double from 1999-2009, up 142 per cent to 7.3Mt.
Historically, Florida was severely lacking in local cement capacity compared to consumption, relying on imports to fill the large supply-demand gap. Between 1995-2006, Florida cement and clinker imports equalled at least 40 per cent of annual state cement demand, peaking at 56.1 per cent in 1999. in the 25 years before 1995, Florida imports fell below 20 per cent of annual cement demand only eight times. Over the past half century, no state matches the overall volume of cement and clinker imports that Florida achieved.
