Cemex loses plant in Venezuela

Venezuela seized foreign-owned cement plants on Tuesday in a show of strength as President Hugo Chavez (left) moves forward with a plan to make the top oil exporter in South America a socialist society. To cheers from workers gathered at the gates, Venezuela took control of installations belonging to Cemex exactly at midnight after failing to reach a deal in cement nationalization talks. Chavez, determined to build a state-dominated economy in Venezuela, has already taken oil and telecommunications companies from private hands and is buying a large Spanish-owned bank and a steel company. Despite losing a referendum last year that would have given him wider scope to remake the economy, the former paratrooper last month used decree powers to pass a package of laws giving the state greater powers to intervene in sectors such as food.

"Their time is up and they move into the hands of the state," Chavez said at a political rally late on Monday. Chavez wants the cement companies, as well as a major steel plant he is buying from an Argentine group, to help meet the home-building and infrastructure goals his administration has struggled with. Source: Wire reports. Your comment?

The Mineral Baby returns

Last year, every person in the United States needed more than 23 tons of minerals and energy fuels to maintain their standard of living, according to the Mineral Information Institute (MII). “With the life expectancy in the U.S. now averaging 77.9 years, this means that the average American will need to have 3.6 million pounds of resources to be mined to provide the products and materials they will depend upon in their lifetime,” said President Nelson Fugate. “The population of the U.S. is 302 million people, so this means that last year, nearly 7 billion tons of different rocks and minerals had to be mined somewhere to make the things we use in everyday living.” Decreases in construction projects in 2007 caused a reduction of nearly 1,500 lbs. per person in the consumption of mineral and energy resources, the majority of it aggregates and cement. During the last 15 years, the per person consumption of minerals has fluctuated from 45,500 lbs./person/yr. (2003) to 48,427 lbs./person/yr. (1999), but there are 32 million more people in the country and their life expectancy has increase from 76.7 years to 77.9 years. This required the mining of 400 million more tons of resources than the estimated 6.6 billion tons provided in 1999 and nearly three times the amount of mineral and energy resources required to maintain the U.S. standard of living in 1950, MII said. Your comment?

PCA: cement useage to plunge

U.S. construction activity and cement consumption will experience significant declines this year, according to a recent Portland Cement Association Economic Research report. Portland cement consumption is expected to drop 10 percent in 2008, followed by an additional 3.6 percent in 2009. Total 2008 cement consumption is predicted to be 102.7 million metric tons.

"High fuel prices, acceleration of home foreclosures, and the impact of the sub-prime crisis on credit standards are some of the current conditions that lead us to believe the economy is already in a recession," Edward Sullivan, PCA chief economist said. "Even when there is recovery later this year, it will not immediately affect the construction and cement industries."

Sullivan anticipates high home inventory levels to depress the residential sector until second half of 2009, causing a 26.5 percent decline in housing starts for 2008. The nonresidential sector, which is closely tied to economic activity, will fall seven percent. "Nonresidential construction typically takes 18 months for recovery. This implies further declines in 2009, coupled with a slowdown in public construction activity during the same period," Sullivan said.

According to the PCA report, in the second half of 2009 the economy will gain strength as residential inventories are burned off and credit terms ease. This will lead to a 5.2 percent growth in cement consumption in 2010 followed by an even stronger gain in 2011. Your comment?

Fatality #1

According to MSHA, On January 21, a 58-year-old contractor truck driver with 3½ years experience was fatally injured at a cement operation. He was found on the ground behind the rear tires of a bulk cement truck that was located at a truck access rack. Truck drivers used this facility to access the hatches on the top of the trucks. Although there were no eyewitnesses, the victim's injuries were consistent with a fall from an elevated location. Your comment?

Cement demand to grow

By 2030 the U.S. population is expected to reach 363.5 million persons. Supplying the needed housing, buildings and roads will lead to a 43 percent growth in U.S. cement consumption by that year. According to Edward J. Sullivan, chief economist for the Portland Cement Association, annual cement consumption will hit 183 million metric tons, reflecting a 55 million-metric-ton increase compared to the past cyclical peak level in 2005. "Sixty-three million more people will be living in the United States in 2030 and they will need homes, schools, hospitals, and roads. This construction will boost demand for cement to record levels." While 50 percent of the rise in cement consumption is due to population growth, the remaining half will be driven by per capita cement consumption. One sector that Sullivan predicts will incur large growth is highway construction. Today, this segment accounts for 30 percent of total annual cement consumption. To meet the demand of the expected additional 49 million drivers, at least 400,000 additional lane miles of highway must be added by 2030. Efforts to reduce congestion and "wasted" fuel and its associated emissions could further increase the number of miles. Additionally, energy and environmental concerns are predicted to boost cement intensities, the tons of cement per dollar of construction activity. For example, houses built with insulating concrete form walls (ICFs) can require up to 44 percent less energy to heat and 32 percent less energy to cool than comparable frame homes. As more homeowners and builders seek energy efficient houses, the insulated concrete wall market share is expected to increase to 30 percent all new homes, compared to its seven percent share today. Your comment?

PCA warns of recession

Despite recent Federal Reserve actions, the sub-prime crisis will adversely impact investment and public spending through 2010, leading the Portland Cement Association (PCA) to again adjust its cement consumption forecast. At his presentation at the PCA Board Meeting last week, chief economist Ed Sullivan announced that PCA now expects 2007 cement consumption to decline 6.9 percent, followed by a 2.5 percent decline in 2008.

Sullivan believes that as the economy weakens due in large part to the sub-prime crisis coupled with increased energy costs, overall nonresidential construction will experience declines, negatively affecting cement consumption. The housing market, according to the PCA forecast, is not expected to rebound until mid-2009.

"Our forecast anticipates the impact of a significant economic growth slowdown on the construction industry, but does not predict a recession," said Sullivan. "A recession scenario is a much grimmer picture." PCA believes the possibility of a recession materializing in the next six months is 40 percent. It expects the Federal Reserve to reduce the interest rate 75 basis points during the next three quarters. However, if the impact of the sub-prime crisis is worse than expected and energy costs hit consumers harder, a recession is possible. Your comment?

"If a recession occurs, construction spending will decline nearly 13 percent, causing a 10 percent decline in 2008 cement consumption and decreasing kiln utilization rates to 85 percent," said Sullivan. "An additional 3.8 consumption decline would occur in 2009, followed by growth in 2010."

Cement usage dips; to rebound by 2009

The serious cement shortages of the past few years really are yesterday's news. Burdened by the hard correction in the housing market, cement consumption has weakened in 2007, according to the most recent forecast from the Portland Cement Association (PCA). Cement consumption this year is expected to fall 4.4 percent lower than 2006 levels. According to PCA Chief Economist Ed Sullivan, however, the decline will be temporary, with a 2.2 percent cement consumption gain anticipated for 2008. "Sustained growth in cement consumption normally occurs when all three sectors of construction--residential, nonresidential, and public--are thriving," Sullivan said. "With the current gain trends in nonresidential and public and most regional residential markets expected to back to track by 2009, we anticipate the onset of a period of continued growth to start that year." Your comment?