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World of Concrete
Cement Outlook
Ed Sullivan, Chief Economist PCA
World of Concrete
Introduction: Overview
The economy is weakening.
A recession is very possible.
50%
Dependent on job creation and Federal Reserve actions.
Fiscal actions will not avert recession.
PCA’s recession scenario is gaining in probability.
Downside risks to baseline forecast projections.
World of Concrete
Portland Cement: Recession (Scenario 50%) Thousand Metric Tons
450
20,450
40,450
60,450
80,450
100,450
120,450
140,450
1995 1997 1999 2001 2003 2005 2007 2009 2011
Baseline Projections
Recession Projections
Recession More Likely: May not be short or shallow. Trough Point 2009
World of Concrete
Cement Consumption: Long Term
50
70
90
110
130
150
170
190
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Million Metric Tons
Growth in Context of Population Changes, Slower US Economic Growth, Strong Global Growth, Climate Change Legislation and the “Green” Revolution.
World of Concrete
Long-Term Cement Outlook
2009-2030
World of Concrete
US PopulationThousands of Persons
200,000
250,000
300,000
350,000
400,000
1980 1990 2000 2010 2020 2030
US Population Adds Roughly 65 Million People by 2030 ….
a 22% Increase.
World of Concrete
Demographics: 2007-2030 Population Adds 65 Million Persons
Adds 9.1 Million School-Age Persons Education Construction
Adds 34 Million Retirement Age Persons Medical
Adds 31 Million Households Housing, Retail & Infrastructure
World of Concrete
Long-Term Public Outlook
2009-2030
World of Concrete
Highway Lane MilesThousands of Miles
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
11,000,000
1996 2000 2004 2008 2012 2016 2020 2024 2028
Just to Maintain Current Highway Congestion Levels, Federally Aided Highways Must Expand Nearly 25% by 2030 . Given 49 Million Additional
Licensed Drivers.
World of Concrete
Pacific
MountainWest North Central
East North Central
SouthAtlantic
East South
Central
District of Columbia
West South Central
NewEngland
Middle Atlantic
51 - 70 mls/100031 - 50 mls/1000≤ 30 mls/1000 71 – 90 mls/1000 ≥ 90 mls/1000
2007 Road CongestionLane Miles per 1,000 Licensed Drivers
World of Concrete
Pacific
MountainWest North Central
East North Central
SouthAtlantic
East South
Central
District of Columbia
West South Central
NewEngland
Middle Atlantic
51 - 70 mls/100031 - 50 mls/1000≤ 30 mls/1000 71 – 90 mls/1000 ≥ 90 mls/1000
2030 Road CongestionLane Miles per 1,000 Licensed Drivers
World of Concrete
Cumulative CO2 Impact From Congestion
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
2005 2010 2015 2020 2025 2030
Metric Tons of C02
2007 Urban Mobility Report: 2007 Urban Mobility Report:
3 Billion Gallons of Fuel Wasted Due to Congestion 3 Billion Gallons of Fuel Wasted Due to Congestion 30 Million Metric Tons of CO2 Emissions30 Million Metric Tons of CO2 Emissions
Addressing Infrastructure Needs Should be Part of a Comprehensive Climate Change PolicyAddressing Infrastructure Needs Should be Part of a Comprehensive Climate Change Policy
World of Concrete
Medicaid Pressures Build
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1970 1995 2004 2009 2014 2019 2024 2029 2034
Billions of $
Blue/Solid: Total Medicaid SpendingBlue/Solid: Total Medicaid Spending
Red/Striped: State Medicaid SpendingRed/Striped: State Medicaid Spending
2032: State Medicaid Spending Exceeds One Trillion $2032: State Medicaid Spending Exceeds One Trillion $
21.5% of Total 21.5% of Total State State
ExpendituresExpenditures25%25%
30%30%
34%34%
World of Concrete
Will Medicaid “Crowd Out” Highway Spending?
$30
$40
$50
$60
$70
$80
$90
$100
2007 2012 2017 2022 2027
Billions of Real State Spending Targeting Transportation
Transportation Spending: Transportation Spending: Constant 8% Share of BudgetConstant 8% Share of Budget
Transportation Spending: Transportation Spending: Share Reduced to 5% of Share Reduced to 5% of
BudgetBudget
Transportation Spending: Transportation Spending: Share Reduced to 7% of Share Reduced to 7% of
BudgetBudget
Gasoline Tax Increases Must Be Viewed in the Context of Future Fiscal Pressures Facing StatesGasoline Tax Increases Must Be Viewed in the Context of Future Fiscal Pressures Facing States
World of Concrete
Long-Term Residential Outlook
2009-2030
World of Concrete
Per Home, Lifetime C02 Savings ICF Home Over Frame
0
10
20
30
40
50
60
70
80
90
100
2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057
Co2 Metric Tons, Per Home
Additional C02 Emitted by Cement Production
Total Heating & Cooling C02 Saving: 92 Tons per Home
Conservatively Assumes 50 Year Life of Home
World of Concrete
ICF & Related Systems: CO2 Savings
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
2007 2012 2017 2022 2027 2032
Metric Tons of CO2
Gains Achieved Though Energy Savings In Gains Achieved Though Energy Savings In Space Heating & CoolingSpace Heating & Cooling
2030: Housing Starts Average 1.9 Million Annually. ICF & Related Systems Reach 30% Market Share2030: Housing Starts Average 1.9 Million Annually. ICF & Related Systems Reach 30% Market Share
10% of Total 10% of Total Housing StartsHousing Starts 20%20%
25%25%
30%30%
World of Concrete
Potential “Green” Gains: ICF & Related Systems
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
2007 2012 2017 2022 2027
Incremental Gains in Cement Consumption, Metric Tons
2030: Housing Starts Average 1.9 Million Annually. ICF & Related Systems Reach 30% Market Share2030: Housing Starts Average 1.9 Million Annually. ICF & Related Systems Reach 30% Market Share
10% of Total 10% of Total Housing StartsHousing Starts
20%20%
25%25%
30%30%
World of Concrete
Long-Term Cement Consumption Outlook
2009-2030
World of Concrete
Cement Share of Cementitious Materials
75%
77%
79%
81%
83%
85%
87%
2000 2005 2010 2015 2020 2025 2030
Share of Total Cementitious Materials
Increased Use of Fly Ash and Slag Reduces Cement ShareIncreased Use of Fly Ash and Slag Reduces Cement Share
World of Concrete
Cement Consumption: Long Term
50
70
90
110
130
150
170
190
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Million Metric Tons
World of Concrete
Supplying the Beast
Meeting Long Term Requirements
World of ConcreteU.S. Supply Balance: No New Capacity Expansion Plans
5060708090
100110120130140150160170180190200
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
Million Metric Tons
Cement Consumption
Clinker Production
Assumes No New Capacity: 2011-2030
Impo
rts
World of Concrete
Supply Gap Grows: Increased Dependence on Imports?
-40
-20
0
20
40
60
80
1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019 2023 2027
Million Metric Tons
Cement Supply Gap
Assumes No New Capacity: 2011-2030
World of Concrete
Freight Rates: Cyclical or Structural Trends ?
$ Per Metric Ton
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2001M1 2002M1 2003M1 2004M1 2005M1 2006M1 2007M1
HANDYSIZE 28-40,000 DWT Transatlantic U.S. East Coast/U.S. Gulf
HANDYMAX 40-50,000 DWT South East Asia U.S. Gulf
World of Concrete
Conclusions
Industry Leadership
World of Concrete
Cement: Long Term Outlook & Sustainability
Long term vision must discount current, short lived business cycles.
Population and economic growth will fuel growth in consumption.
“Green” advantages of concrete will add to growth.
Fabric of demographic changes presents new challenges.
Climate change legislation offers opportunity and risk.
Global growth adds a new wrinkle to long term supply.
World of Concrete
Cement Outlook
Ed Sullivan, Chief Economist PCA