ACA sees US cement demand falling on Middle East war, rate pressures

The American Cement Association has revised its expectations for 2026 US cement consumption downward to a 2.5% decline, according to its spring forecast.

The ACA credits this shift to a "black swan" event -- the ongoing conflict in the Middle East and the subsequent effective closure of the Strait of Hormuz -- which has severely disrupted global supply chains and caused oil prices to spike roughly 60% above pre-conflict levels.

This geopolitical supply shock has significantly altered the macroeconomic backdrop, the ACA said.

With inflation rising to 3.3% in March due to the energy crisis, the ACA now anticipates that the US Federal Reserve will issue only a single 25-basis-point rate cut in October, a sharp departure from previous expectations. Consequently, borrowing costs and mortgage rates are expected to remain elevated, further straining a cooling US labor market and dampening consumer confidence.

The ACA said in its forecast April 30 that sustained high interest rates will lead to another weak year for private construction, with single-family housing starts projected to drop 5.2% and nonresidential cement consumption to recede 5%.

Public construction is expected to be less sensitive to these rate hikes, though the ACA said the sector faces its own headwinds regarding the uncertain reauthorization of surface transportation funding as the Infrastructure Investment and Jobs Act sunsets this year.

"A black swan event has come in the form of the conflict with Iran, and it's clear the longer hostilities in the Middle East continue, the weaker the cement forecast becomes," said Brian Schmidt, ACA's senior director of economic policy and analytics.

Despite these immediate challenges, the ACA's baseline forecast assumes the Middle East conflict will resolve within four to eight weeks, allowing the US to avoid a recession narrowly. While real construction spending is projected to fall 3.1% in 2026, the ACA predicted that cement consumption will finally turn positive in 2027 as the economy stabilizes, inflation cools and the construction sector regains its footing.

Platts, part of S&P Global Energy, last assessed cement CIF Houston at $88/metric ton on April 30.