Portland cement firm acquires import terminal
Friday, February 3, 2006 7:09 AM PST
By Daily Journal of Commerce
Printable version
E-mail this articlePORTLAND, Ore. (AP) -- The Pacific Northwest can expect a big boost to its cement supply this fall.
Ash Grove Cement Co. has acquired a new import terminal facility from Goldendale Aluminum in Portland -- a move, Ash Grove said, that will allow the company to increase its annual supply to the region by up to 800,000 tons of portland cement, the main ingredient in concrete.
Overland Park, Kan.-based Ash Grove is the only one of Portland's four cement suppliers that does not currently import offshore cement to the Northwest.
Ash Grove has instead supplied Oregon and Idaho from its Durkee manufacturing plant in Eastern Oregon.
The Goldendale facility, scheduled to open in September, will allow Ash Grove to begin importing cement from manufacturers in China and India.
The facility is located on the Willamette River adjacent to Ash Grove's current facility, which has storage capacity of 18,000 tons. The new facility brings capacity for Ash Grove's Portland operation to 72,000 tons and increases its waterfront property to three-quarters of a mile.
"The Northwest and Rocky Mountain areas have been a very hot market in the last few years," said Dave Baker, vice president of sales for Ash Grove in Portland. "As a result, we saw an opportunity here to buy this other terminal where we can import and supplement our supply to better serve the market."
Ash Grove currently has five cement manufacturing plants in the Northwest and has expanded two of them in the past five years, increasing production to 900,000 tons from 500,000. The company has also begun construction on a new facility in Las Vegas but doesn't expect production there to begin until 2009.
Construction industry demand for cement skyrocketed after hurricanes Rita and Katrina struck the Gulf Coast last year.
That constraint on capacity was a further hit to builders who had already weathered a 12.6 percent increase in the cost of cement, according to the American Road and Transportation Builders Association.
"In 2005, we had 32 areas (of the country) that ran short of cement at certain times of the year," said Ken Simonson, chief economist with the Associated General Contractors of America. "With the demand for cement growing in 2006 and very little expansion of production, I think further supplies are limited."
In response to the shortage, the U.S. government on Jan. 19 announced a preliminary trade agreement to reduce import taxes on Mexican cement that the U.S. believes would help alleviate cement shortages and reduce building costs.
But the agreement, if completed, might not ease cement shortages in the Northwest, said Simonson, who predicts that a "modest increase" in cement imports from Mexico would simply replace a portion of the imports from countries such as China and Greece, which transport product by ship.
The delivery time for imported cement brought by rail from Mexico would be shorter to states in the Gulf region, Simonson predicted, and would help alleviate the immediate supply shortfalls of cement there but would not significantly affect the national supply.
Cement prices will continue to increase in 2006, Simonson said in a January report on materials costs.
The Ash Grove expansion is good news for Portland-area contractors that have faced project delays and escalating costs due to cement shortages.
"The (Ash Grove) site will bring more cement into the Portland market and will help ease some of the shortfall," said Rich Angstrom, president of the Oregon Concrete and Aggregate Producers Association.
"It will be a big deal" for ready-mix producers and contractors, he said.
In addition to facing a nationwide production shortfall, the cement market has also been squeezed by the high costs of transporting the material by rail from other regions, Angstrom said.
"Ash Grove is capitalizing on the shortage with their movement to site another cement facility in Portland," he said.
The Goldendale terminal offers storage capacity of up to 54,000 tons that could help maintain a larger, more easily accessible cement supply in Portland.
The facility also has two rail access points for easier product distribution to outlying areas.
"The Ash Grove expansion is going to add more capacity to the Northwest cement market. Plus, it's probably going to help alleviate some problems inland in states farther east because of the access to rail that they'll have," said Kevin Richardson, a Portland-based sales representative for Lafarge, the world's largest cement producer.
Lafarge, currently Portland's smallest cement supplier, was one of several companies to unsuccessfully bid on the Goldendale facility.
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