Cement Americas

SPR 2017

Cement Americas provides comprehensive coverage of the North and South American cement markets from raw material extraction to delivery and tranportation to end user.

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10 CEMENT AMERICAS • Spring 2017 • www.cementamericas.com The following is a Portland Cement Association (PCA) Market Intelligence analysis of potential impacts to cement consumption associated with building a wall along the border of Mexico that is being considered by the Trump Administration. For context, the land border with Mexico crosses four U.S. states, spanning 1,933 miles: California (140 miles), Arizona (373 miles), New Mexico (180 miles) and Texas (1,241 miles). Total cement consumption attributed to the con- struction of a wall would represent only a fraction of total U.S. cement consumption. Prior to the boom period of 2004-2006 that was ignit- ed by low and exotic mortgage rates, the cement in- dustry averaged slightly more than 100 million metric tons (Mt) of cement consumption annually. Using this level as the basis, construction of the wall as defined by PCA would amount to less than 1 percent of total national construction. The wall's construction, how- ever, is a regional phenomenon focusing on the four border states. Natural barriers may reduce the coverage of the wall. Natural barriers may reduce the coverage of the wall, given the border between the U.S. and Mexico in- cludes rivers and mountains, which account for 973 miles of border. This reduces the "wallable" border 960 miles. Natural borders include Arizona (19 miles) and Texas (954 miles). California and New Mexico have no natural borders. Man-made barriers already exist along the border, potentially reducing the length of a wall. Man-made physical barriers of entry into the U.S. from Mexico already exist along some portions of the border. By state, these barriers include California (140 miles), Arizona (324 miles), New Mexico (120 miles) and Texas (160 miles). Some of these barriers include fences and vehicle barriers. Some of these barriers may, or may not, constitute wall criteria according to the Trump Administration. PCA assumes these barri- ers are a sufficient barrier and meet the Trump Ad- ministration's definition of the wall and will not need additional investment. Texas represents the major area of wall construction. Considering the border mileage, and subtracting out natural and existing man-made barriers suggests that wall construction represents 217 miles – far different than the nearly 2,000-mile border believed by some. Of this, 127 is attributed to Texas, New Mexico (60 miles), Arizona (30 miles) and no construction re- quired in California. These estimates all depend upon the definition of a wall. PCA's assessment may be a liberal interpretation due to its inclusion of fences and vehicle barriers. The size of the wall has significant impact on associ- ated cement consumption. There is no indication as to the wall's material speci- fication. Steel, concrete or a combination of both, are the likely materials used. Since this analysis is to de- termine the ability of the cement/concrete industry to meet potential assessments, we assume all construc- tion will be concrete. Dimensions of the wall contribute to potential cement consumption attributed to its construction. PCA con- siders a high and low scenario regarding the dimen- sions of the wall. The lowest height of the wall is as- sumed to be 20 ft. The highest height of the wall is assumed to be 60 ft. The lowest width of the wall is assumed to be 8-in. thick. The highest width of the wall is assumed to be 12-in. thick. PCA takes these di- mensions and combines them with the typical amount of cement/concrete used for this type of construction by area and then combines them with the miles to be construction to form the basis of cement consumption required for the walls construction. Consumption among border states remains de- pressed compared to past peaks. Cement consumption among the four border states declined 13.9 Mt, or more than 46 percent during the recession – peak-to-trough. Since then tepid recovery in the economy has added 6.3 Mt to cement consump- tion. This level, however, remains 25 percent below past cyclical peak levels. Capacity utilization rates in the border region are low. As a result of the slow economic recovery among bor- der states, utilization rates remain low and may offer PCA Market Intelligence Special Update: "The Wall" and Its Potential Impact on Cement Consumption

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