Ken Simonson Demand Quotations

Many construction materials are likely to be pricier and scarcer because the storms knocked out so much supply, even if demand does not pick up. The loss of substantial oil and natural gas production will affect supplies and prices for diesel fuel, asphalt, roofing materials, insulation, PVC pipe, coatings and assorted construction plastics.

I expect some slow improvement in the Dallas-Fort Worth area. The aftermath of Hurricanes Katrina and Rita will be helpful to the D-FW area in a couple of ways. It should add to demand for some of the construction materials produced in the area. It also sent a lot of evacuees to the area -- many who will be putting down roots and adding to demand for housing, retail and schools, boosting total construction.

The demand for concrete has been outstripping supply for several years. We've become more steadily dependent on imports.

Whether the recovery from Katrina adds to demand for construction materials depends on the types and speed of rebuilding in damaged areas.

In 2005, we had 32 areas (of the country) that ran short of cement at certain times of the year. With the demand for cement growing in 2006 and very little expansion of production, I think further supplies are limited.

For 2006, I expect to see healthy demand for nonresidential construction but also double-digit price increases for many construction inputs. I expect continuing spot shortages of cement that will push concrete prices higher nationwide.