Washington – Cement and steel companies, hard-hit by the housing downturn, could see demand improve in the next couple of years in the wake of the deadly collapse of Minnesota’s Interstate 35W bridge.
“Unfortunately, this is a timely event that will push people looking at (the bridge problem) to give us some answers,” said Heather Brown, director and associate professor of the concrete-industry management program at Middle Tennessee State University.
That doesn’t mean bridge-construction contracts will start being handed out this year, although Congress is trying to fast-track federal funding for repairs to Minnesota’s damaged bridge.
After bridge inspections are completed, it still likely would be up to two years before government contracts would be issued, says Ed Sullivan, chief economist at the Portland Cement Association, an industry group based in Skokie, Ill.
“Demand would be ramping up at a time when industry can meet it,” Sullivan said, because companies had already implemented production-increase plans for next year and beyond in hopes of a housing rebound.
Now, they can look to increased demand for bridge reconstruction.
Mired in a slump since record consumption and spending in 2005, the U.S. cement industry last year embarked on an expansion effort and plans to invest $5.5 billion to increase domestic capacity 20 percent by 2010, Sullivan said.
There were 122.5 million metric tons of cement consumed in 2005, a number expected to drop to 116.5 million this year, before surging to 128.9 million in 2010.
Foreign companies own about 81 percent of U.S. cement capacity, according to the trade group. The three largest providers – France’s Lafarge SA, Holcim Ltd. of Switzerland and Mexico’s Cemex SAB – each control about 13 percent of the U.S. market.
Del Boring, vice president of construction at the American Iron and Steel Institute, whose members include Nucor Corp. and U.S. Steel Corp., said those companies also would step up to meet demand if bridge-repair contracts increased.
The industry produced more than 7 million tons of the steel plate used in bridges last year. The bridge market usually represents about 5 percent of the yearly total, although it has risen since increased federal funding was approved in 2005.
Even if demand from bridge repair and construction doubled, Boring said he is “completely confident on the material side, capacity would not be an issue.”
Charles Bradford, a steel analyst with Bradford Research/Soliel Securities, urged caution on the industry’s ability to keep pace.
The 2005 federal highway bill included hundreds of billions of dollars for bridge repairs, but “these projects take forever” and the money is not going as far as people hoped, he said.
In the aftermath of the Minnesota tragedy, approval for public projects is likely to pick up, and meeting that demand “would be difficult,” Bradford said.
