The Portland Cement Association's (PCA) Spring Cement Consumption Forecast for 2021-22 indicated that cement demand in the USA could match or exceed last year's growth of two per cent, despite the loss of nearly 9.5m jobs and a severe decline in real GDP as a direct result of the country's lockdowns and economic impact from COVID-19.

Further, the PCA was keen to highlight the long-term upturn in US cement demand that would be supported by the US$2.2trn eight-year infrastructure 'Build Back Better' programme, proposed by the Biden administration. This could boost cement consumption by more than 7Mta until 2025 and a three per cent volume CAGR.

The PCA estimates that even if the infrastructure programme is reduced to just traditional infrastructure projects this would still see a 4.1Mta additional rise in cement consumption and a CAGR of two per cent. Furthermore, without a new infrastructure programme cement is forecast to grow by 2.2 per cent to 2022,  1.25 per cent in 2023 and below one per cent in 2024 and 2025. 

Which multinationals can expect to benefit?
Cemex released somewhat conservative guidance for 2021 after its 4Q21 results, according to UBS analysis. Cemex does not expect as much disruption this year from COVID-19 as it suffered in 2020, and it recognised that it had a strong end to 2020 in the USA with significant monetary and fiscal stimulus going forward. Cement volumes for Cemex US rose by 15 per cent in 4Q20 compared to 4Q19 and prices also increased by two per cent. Over the year cement volumes grew by eight per cent in the US for Cemex in 2020, but it gave an outlook of just a 1-3 per cent growth in its outlook for US cement volumes in 2021.

Buzzi Unicem reported strong hydraulic binder volumes in the US in 2020, up five per cent from 2019. However, it was also cautious about the year ahead. Buzzi Unicem expects moderate growth from construction investments while balancing this against inflationary costs and the weakness of the dollar which could see a decline in results in 2021.

LafargeHolcim had a more challenging 2020 in the US in terms of cement volumes, which fell 4.8 per cent to 19.8Mt from 20.8Mt in 2019. 

Similarly, Cementos Argos saw a fall in cement volumes in 4Q20 to 1.489Mt compared with 1.535Mt in 4Q19, a decrease of three per cent. Throughout 2020 Argos' cement volumes fell to 5.886Mt from 6.287Mt in 2019, down 6.4 per cent.

Lehigh Hanson (HeidelbergCement) improved its 4Q performance in 2020 reaching North American cement sales volumes of 3.942Mt, up 2.3 per cent from 3.855Mt in 4Q19. However, its total cement sales in the North America for the year dipped to 15.554Mt, down 3.5 per cent from 16.114Mt in 2019.

Vicat posted increasing sales in the Americas to EUR636m in 2020, up 17.2 per cent from EUR589m in 2019. US sales rose by eight per cent for the group in 2020. However, Vicat is modernising its Ragland cement plant with a new 5000tpd clinker line, including a new preheater and precalciner, which is likely to affect this US plant's output in 2021. 

Meanwhile, last year, Titan America saw cement consumption rise in Florida on the back of increased housing demand, even if this was somewhat offset by a lack of non-residential construction. Revenue from US cement operations for the group increased to US$1.07bn.

Summary
While most of the multinationals operating in the US have seen cement volumes decline slightly in 2020 compared to 2019, most of them saw sharp 'V-shape' recoveries in the 4Q20. The PCA's Spring Cement Consumption Forecast suggests that there will not be a further reduction in cement sales over the next 12 months. However, cement producers are concerned about unfavourable exchange rates, higher energy costs and any resurgence of the COVID-19 pandemic. On the positive side, Cemex appears best positioned to increase its US market share from the increasing cement demand.

 

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