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Shortage of cement now in 35 states

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WASHINGTON -- A cement shortage triggered by increased home building in the United States and demand from Asia has spread to 13 new states, bringing the number of states affected by tight supplies to 35, an industry trade group said.

"Without a significant increase in imports and without a decrease in demand for single-family homes, this situation could be stretched out" into early 2005, said Ed Sullivan, chief economist for Skokie, Ill.-based Portland Cement Association, which represents U.S. and Canadian cement companies. The group expected conditions to ease by year-end, he said.

The newest states experiencing shortages are largely in the Midwest, Southwest and Northeast, Sullivan said. They are Utah, Arizona, Arkansas, Indiana, New Hampshire, New Mexico, Ohio, Texas, Missouri, New Jersey, Pennsylvania, Vermont and Delaware. Some shortages are local, not statewide, he said.

Residential construction helped underpin economic growth since the 2001 recession. Rising material prices added as much as $7,000 to the cost of building a new home earlier this year, the National Association of Home Builders said in August.

Housing starts reached an annual pace of 2.067 million units in December, the fastest since February 1984. Housing starts fell 6 percent in September to a 1.898 million rate, the first decline in three months, the Commerce Department said Oct. 19.

Ongoing construction in parts of the United States late last year kept plants from stockpiling cement, the trade group said. Demand from Asia diverted imports that would otherwise go to the United States, limiting the number of ships available and causing freight costs to more than double between January 2003 and April of this year.

Producer prices for cement, which is used to make concrete, rose by 3.6 percent from June to September on a seasonally adjusted basis, according to the Labor Department. The unadjusted price rose was up 6.1 percent from September 2003.

Raw material costs are offsetting an anticipated 20 percent revenue increase this year at Chandler Ready Mix in Mesa, Ariz., President Charles Wallace said. The company, which expects $150 million in 2004 sales, began limiting the amount of ready mix concrete its customers may buy in June, he said.

"We'll see spot shortages and tight supplies over the next five or 10 years," Wallace said. "As long as other countries around the world and their economies come on strong, the demand for cement will be there."

Builders used to getting concrete within a day are waiting as long as two weeks, said economist Ken Simonson of the Associated General Contractors of America in Alexandria, Va. Suppliers passed on two price increases totaling up to 10 percent this year, he said.

Homes are being delayed by a few weeks to a few months, according to the homebuilders association.

Oregon, Washington, Idaho, Montana, Wyoming, Colorado, Nebraska, Kansas, Oklahoma, Wisconsin, Illinois, Michigan and Maine reported no shortages, the trade group said. Only Nebraska said conditions improved. Alaska and Hawaii aren't in the survey.

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