The Portland Cement Association (PCA) has released its annual Fall Forecast, which predicts that a decrease in cement consumption will continue into 2021. PCA, Skokie, IL, is a policy research, education, and market intelligence organization serving America’s cement manufacturers. PCA’s market intelligence based the near-term cement consumption prediction on a weighted average of three likely economic scenarios, estimating that cement consumption will fall by 1.5 percent for the remainder of 2020 and 0.9 percent in 2021. All scenarios take into account a significant increase in COVID-19 infections during the fourth quarter of 2020.
The first scenario assumes a U shape in the market that would entail an increase in COVID-19 consistent with many baseline epidemiologist’s projections. In this scenario, the economy would achieve a gradual sustained recovery with 2021 cement consumption nearly reaching 2020 levels.
The second scenario assumes a W shape that would entail an increase in COVID-19 consistent with epidemiologist’s high-case count projections. In this scenario, consumers would retreat, state governments would become more active in preventing COVID19 spread, and a two-quarter recession would develop in 2021. This would cause a consumption decline that’s more acute in 2021 with a slower recovery.
The third scenario is a vaccine-introduction scenario that follows a U shape projection in COVID19 infections with a widespread vaccine distribution by the third quarter of 2021. Under this scenario, cement consumption grows throughout the forecast horizon.
The PCA believes that the gradual sustained recovery along with a U-shaped market curve will be the most likely outcome followed by the vaccine scenario. In terms of construction sectors, Ed Sullivan, PCA senior vice president and chief economist, believes that nonresidential will be among the weakest construction areas, particularly as it relates to retail, hotel, and office construction. For more info on the report, visit www.cement.org/economics.