How Concrete Producers Can Maintain Profitability with Cement Price Increases

It’s no surprise for producers to learn that cement price increases are expected to continue in the months to come. Though notoriously volatile due to their dependence on energy costs and raw material supply chains, the market is anticipating an unprecedented increase of 12% for 2022. The average increase of cement prices around the world (excluding China) is forecast to be 5.9% in 2022, with the United States expected to see an increase by 7%. 

If you’re a concrete producer, the rising price of cement of course means an increase in costs for business. You'll be forced to pass on that price increase to your customers, which can damage relationships and make it more difficult for you to get and keep new customers in a competitive market.

It's a tough situation, but luckily there are ways for you to boost your bottom line outside of changing your pricing structure. The following points provide three strategies that can save you money while also increasing your output and efficiency.

What can concrete producers do to control costs when the price rises?

The cement industry is experiencing a boom thanks to infrastructure projects; however, the industry is also facing challenges caused by the growth of the sector, resulting in price increases for trucking and labor, delays due to covid, and labor shortages.

Additionally, US tariffs on steel imports have added to production costs for concrete producers in both the US and Canada. Tariffs have increased demand for certain materials like fly ash and steel slag, which have resulted in decreased availability of these materials at competitive prices while pushing up their costs overall.

Just as cement prices vary depending on the reason for price increases, so do ways to reduce construction costs. Here are a few that concrete producers can take to help them weather the storm:

• Optimize cement content with lower-cost performance SCMs
• Optimize mix designs for specific applications
• Review your operations for bottlenecking

1. Optimize cement content with lower-cost performance SCMs

A key step to managing the impact of rising cement costs is to maximize your performance by including supplementary cementitious materials (SCMs) in your mixes. Cost forecasts on slag and fly ash suggest lower fluctuations and greater affordability than cement. The inclusion of these standard SCMs can also reduce the carbon footprint of the finished product — providing an opportunity for concrete producers to hold onto their margins in a challenging market environment while reducing emissions.

Specialty SCMs offer even more cost-saving opportunities. Pozzolan, metakaolin, and silica fume can maintain the performance of your project requirements with reduced cement inputs. CarbonCure is an innovative product that allows concrete producers to reduce their dependence on cement without sacrificing the strength or performance of their concrete mixes. CarbonCure is also a stackable option, meaning it works with various blends including binary and ternary.

2. Optimize mix designs for specific applications

Using different concrete mixes for different applications can help you to maintain profitability in spite of rising cement costs. For example, consider using lower-strength concrete on low-use sidewalks and roads or in non-structural applications.

This way, you’re not spending more on strong concrete that isn’t necessary for the job. You may also be able to use more economical water-to-cement ratio mixes in areas where high strength isn’t required. This is a good strategy for outdoor slabs and under-slab plumbing.

You can also implement CarbonCure to help you safely and comfortably optimize your mix designs by adding CO₂ and reducing an average of 4-6% of cement — while maintaining the mixes’ strength and quality. You can also use recycled materials in your mixes, such as reclaimed water, to reduce production costs and achieve even further optimization and efficiencies.

3. Review your operations for bottlenecking

As a concrete producer, it's important that you be aware of how cement price increases may affect your profitability. Maintaining profitability will require you to find effective ways to trim expenses and make your construction operations more efficient.

Fortunately, there are ways that concrete producers can tackle these challenges. Investing in concrete technologies can help reduce labor costs, retain talent and improve operational efficiencies, while also increasing job site safety. Here are some areas where producers can look to invest in new equipment:

• Concrete pumps for efficient material placement
• Concrete mixers for improved productivity and versatility
• Concrete finishing tools for efficient surface preparation
• Concrete vibrators for faster consolidation

At the plant level, updating standard operating procedures to be more sustainability-oriented across the board can also help. For example, you can launch protocols which prohibit the idling of vehicles and which require lights not be left on unnecessarily to reduce energy output and costs. Building upgrades can also go a long way, such as sealing any cracks where heat might escape and upgrading to a more sustainable heating and cooling system.

Remain profitable despite the price increase

As a concrete producer, the good news to keep in mind is that you do have options to help deal with price increases. While "use less cement" and "use recycled materials" are obvious solutions, improving efficiency is more nuanced. By streamlining processes and tweaking the ratio of ingredients in your mix design, producers can achieve significant savings without compromising quality or integrity; the key is to implement changes that won't affect the product's final performance.

All things considered, the best solution may very well be to deploy each of these strategies, especially since they can all be used together to create maximum benefit. It’s a win-win for both your concrete business, and the environment.

To learn more about how CarbonCure can help you improve your bottom line and stay competitive in your marketplace, contact a CarbonCure rep today.