U.S. Commerce Department officials have announced an agreement in principle with Mexico to virtually eliminate anti-dumping duties on Mexican shipments of cement to the United States.
In place since 1990, the import penalties are intended to correct for aggressive underpricing by Mexican multinational CEMEX. But a cement shortage in the United States has prompted U.S. builders to call for an end to the duties.
Under the terms of the deal, penalties would drop from $26 per metric ton to just $3 per metric ton, a reduction of almost 90 percent. But U.S. authorities would set a cap on total shipments: No more than 3 million metric tons of cement per year could enter the country from Mexico.
Will the new deal take the stress off the tight U.S. market? No way, says Portland Cement Association economist Ed Sullivan. Total imports from Mexico for 2005 were around 2.3 million metric tons, he says, so the 3 million quota will only allow an increase of 700,000 tons in 2006. “That's just 2 percent of U.S. imports, and under 1 percent of total U.S. demand,” says Sullivan. And, he adds, railroad capacity shortfalls might limit shipments to below the allotted 3 million metric tons.
Association of General Contractors economist Ken Simonson says, “This agreement will enable suppliers to substitute Mexican cement for cement from farther away, making deliveries quicker and perhaps relieving some spot shortages.” But Simonson still expects cement prices to rise 8 percent to 10 percent in 2006. Bottom line, he says: “The U.S. still needs more domestic capacity.”