Untitled Document

Cement – between a rock and a hard place
Shortage has not reached Idaho... yet

Limited supply, high demand and rising prices are beginning to impact the nation’s economy. Gasoline prices? No, but almost as foundational.

Cement.

The fine, gray powder that binds aggregate to form bridges, road bases and highway surfaces. The same ingredient used as footings, foundations and sidewalks for new homes. The same ingredient used in high-rise construction and backyard patios. A ubiquitous substance mined from hillsides and, until recently, taken for granted.

Cement is a combination of ingredients, typically ground limestone, sand, iron ore, clay, shale and gypsum. The addition of water to cement causes a chemical reaction known as hydration, which in turn produces concrete, a rock-hard binding agent.

A cement shortage began dotting the U.S. in late 2003 and into last year, primarily impacting construction on the East Coast. Supply limitations are beginning to show up in the western states where building is booming. And it’s been blamed, perhaps unjustly, for delaying a highway project south of Lewiston for about six weeks.

“We have been watching it the last couple of years,” admits Clint Hoops, an ITD field services engineer based at Headquarters in Boise. “It really hasn’t had much of an effect on Idaho because we’re so close to the suppliers in Oregon, Utah, Montana and here in Idaho.”

One of the primary cement suppliers for concrete used in ITD projects is Ash Grove Cement. The nation’s fifth-largest cement manufacturer has production plants throughout the country, including one near Durkee, Ore., north of Ontario, and in eastern Idaho.

The Durkee plant produces about 900,000 tons of cement annually, explains regional sales manager Leonard Bietz. Instead of characterizing the cement supply as a “shortage” in the Northwest, he describes it as a delivery concern. At current consumption levels, the supply is adequate, he says.

Ash Grove is working hard to keep up with demand and prevent a shortage. But it may be a tight walk, Bietz admits.

“We’re asking our customers to stay at last year’s consumption level, which was the largest year ever for cement use,” he said. “We’re keeping up with demand, but if volume continues to grow, we could have a supply problem. We’re trying to prevent a shortage from occurring.”

Unprecedented growth in the housing market and a mild 2004-05 winter make it challenging to keep pace, he said. The Durkee plant operates seven hours a day, every day. During the winter, when demand diminishes, the plant usually produces a surplus of cement that is stockpiled for peak demand periods.

That didn’t happen last winter. Construction continued uninterrupted, so there was no opportunity to build a cement reserve. “We weren’t able to build up an inventory,” he said.

Other cement manufacturers in the Northwest experienced the same constant demand.

Because there is no cement in reserve, scheduling the delivery of cement is more crucial than ever, Bietz says. In the past, Ash Grove delivered cement to concrete batch plants without additional charge. Beginning this year, however, the cement is sold FOB, at the cement plant. Concrete companies must arrange their own transportation, which is complicated by a shortage of trucks and qualified, licensed drivers.

The cement supply nationwide also is influenced by the emergence of China as a major international consumer. The world’s most populous country and largest cement producer has been a net-exporter of cement. But economic growth, new highways and dams, and construction of a new Olympic venue, have reversed the role and now China imports cement.

That has contributed to a drain on supplies from other international cement exporters, including India and Thailand. And it has contributed to a shortage of ocean-going vessels that traditionally deliver cement to U.S. ports.

On a regional level, Hoops and Bietz speculate that delays in the U.S. 95 Winchester grade project south of Lewiston are more a consequence of delivery than supply.

Construction companies need to secure a cement source and arrange for transportation well in advance, which is a new concept for many companies that have assumed on-demand delivery in the past, Hoops explains.

The U.S. 95 project uses a process ITD refers to as CRABS – cement recycled asphalt base stabilization. The existing surface is pulverized, cement is added to form a solid base, and a new asphalt surface is applied.

CRABS projects require a 2 percent mix of cement for the base and consume about 150 to 200 tons of cement per mile, explains Hoops. That translates to about five truckloads of cement per day for the U.S. 95 project. The subcontractor was guaranteed only about three trucks daily.

Engineers experimented with a base that used less cement and determined the strength was sufficient. Construction resumed after being a delay of about six weeks.

As a large consumer of concrete, ITD projects take precedence over smaller construction. If a cement shortage occurs, it likely will surface first in home and commercial construction. In fact, contractors who in the past called for same-day concrete delivery now must plan their projects and schedule delivery in advance. On-demand delivery may be a luxury of the past.

Fortunately, ITD is not complicating the supply issue much this year because construction activity has slowed since last year. The department has two major CRABS projects scheduled this summer along with two interchanges near Idaho Falls and the first stage of the a Twin Falls alternate route planned to begin this fall.

Concrete Placing Co. of Boise has the contract for the Twin Falls project, which is expected to use 2,000 to 3,000 yards of concrete daily, said Mike Burke, a project manager for the company. He doesn’t anticipate a problem with supply, but it likely will cost more than last year.

The company paid about $65 to $75 per yard for concrete used on the WYE Stage II and a six-mile expansion of Interstate 84. The cost for concrete is $100-$120 this year. And eventually that will be factored into project bids, he predicts.

“Utilization of current supplies has driven prices up, but we’re not at the point that we can’t complete ITD projects,” Burke says.

This construction season doesn’t compare with 2004 when the WYE Interchange was completed, a fourth lane was added to Interstate 84 between the WYE and Meridian, and approximately 16 miles of I-84 resurfaced near Glenns Ferry – a few of the major cement-consuming projects in southwest Idaho.

And demand likely will reach new levels when the interstate is rebuilt from Meridian to Caldwell and from the Orchard to Gowen interchanges in east Boise. Contractors and engineers hope inventories will be adequate for those large cement-consuming projects.