US Cement tariffs slashed

US: The US has cut tariffs on cement imported from Mexico from US$ 26.28 per tonne to just US$ 3 per tonne. The move comes following several years of cement shortages in the US during peak summer months, which are expected to be compounded this year by reconstruction in the southern states damaged by hurricanes last year.

Under the agreement reached in January, there will be a three year transition period during which the US 'antidumping' legislation will be eased. This will allow Mexico to export 3 million tonnes of cement per year to the US at the reduced rate of duty. Tariffs will then be completely removed in early 2009.

The agreement will also see a partial refund of duties to cement manufacturers. Cemex, for example, is expected to receive US$ 100 million in cash, while Cementos Chihuahua is expecting a US$ 40 million windfall.

However, there are doubts as to whether the easing of tariffs will completely solve cement shortage problems in the US. Portland Cement Association (PCA) chief economist Edward Sullivan told iC, “The Mexican cement industry has the capacity to solve the current cement supply problems in the US but the potential is limited by lack of capacity to increase imports through either rail or water. Increasing Mexican imports may have some regional benefit but it will not remove the supply problem on a national basis.”

Mr Sullivan added that the PCA expected demand for cement in the US to grow +3.3% in 2006 and predicted that at least 30 states will experience tight supplies this year.