ACA Revises 2026 Forecast Amid Regional Conflict

Why It Matters

Higher financing costs directly curb construction spending, making the cement market a bellwether for broader economic health. Stakeholders need to anticipate a soft 2026 followed by a rebound, influencing investment and capacity decisions.

Key Takeaways

• ACA forecasts 2.5% drop in U.S. cement demand for 2026.
• Higher borrowing costs stem from Iran conflict‑driven bond market volatility.
• Private‑construction slowdown drives most of the consumption decline.
• ACA expects demand to rebound in 2027 despite geopolitical risks.
• Mortgage rates now match pre‑Fed‑cut levels, pressuring builders.

Pulse Analysis

The ACA’s revised 2026 forecast underscores how geopolitical shocks can ripple through the U.S. construction supply chain. Iran’s February conflict has rattled global bond markets, raising yields and, in turn, mortgage rates to levels seen before the Federal Reserve’s rate‑cut cycle began last September. For cement producers, financing costs are a critical lever because they affect developers’ ability to fund new projects. As borrowing becomes more expensive, developers delay or scale back private‑sector builds, directly curbing cement demand.

Private‑construction activity accounts for roughly 70% of U.S. cement consumption, so the sector’s slowdown amplifies the impact of higher rates. Builders now face mortgage rates comparable to early‑2022, eroding profit margins and prompting a cautious stance on new housing and commercial projects. This environment mirrors the post‑2008 recovery period, where elevated financing costs suppressed construction volumes until rates fell. Consequently, cement manufacturers may see inventory build‑ups and reduced utilization rates, prompting them to adjust production schedules and explore cost‑saving measures.

Looking ahead, ACA’s confidence in a 2027 rebound rests on the expectation that geopolitical tensions will ease and borrowing costs will normalize. If bond markets stabilize and mortgage rates decline, private construction could regain momentum, reigniting cement demand. Industry players should therefore monitor macro‑economic indicators, diversify into public‑infrastructure contracts, and consider strategic hedging against rate volatility to mitigate the 2026 dip while positioning for the anticipated recovery.