As regional shortages driven partly by demand for transportation capacity from China ratchet up cement prices in North American, the situation in the South America couldn�t be more different.

�Right now we are seeing exactly the opposite,� says Fernando Alvarez, infrastructure director for the Colombian Institute of Cement Producers. �The price right now is very low due to our surplus.�

Across Latin America, cement production is growing at about 15% each year, according to the Interamerican Cement Federation (FICEM). In Colombia, cement volumes grew 30% during the third quarter of 2005 mainly due to high demand from the self-construction sector and infrastructure spending, says FICEM head Amalia Lucia Rozo.

�The demand of cement in the region is growing but the increases in production are sufficient to absorb that,� she says. �Some of the countries have a lot of capacity with almost no use. In most of the countries, as much as half the capacity is surplus.�

Colombia has the capacity to produce 50 million tons of cement but only consumes about 6 million tons each year. Slightly less than 3 million tons are exported annually�almost all to the United States.

According to FICEM, a housing boom across South America is driving cement demand, accounting for almost a third of the market. Highway construction, by contrast, only makes up about 12% of the demand.

�Basically, the Latin American cement market is a mirror to the region�s GDP rates,� she says.

Latin America�s economy grew by 4.3% in 2005, the third straight year of growth, according to estimates by the International Monetary Fund. The U.N.�s Economic Commission for Latin America and the Caribbean estimate that the region will see growth of 4.1% in 2006.

The stability of the domestic market allied with rising prices in the U.S. has more South American companies looking north for business opportunities.

According to the Portland Cement Association, the U.S. is expected to import 33 million tons of cement in 2005, roughly 27% of the total consumed annually in the country. Between October 2004 and October 2005, cement prices have risen 13% in the U.S., according to U.S. government statistics issued by the Dept. of Labor.

The association�s fall forecast projects 2006 imports to reach 35 million tons and large South American cement companies like Colombia�s Cementos Argos are looking to be a part of that growth.

CEMEX operations in Latin America reported net sales of $358 million during the second quarter of 2005, an increase of 16% over the third quarter of 2004. Domestic cement volumes in the region increased 16% in the quarter versus third quarter 2004. The company is the second largest in Colombia, holding about a third of the market there.

Other companies are being even more aggressive trying to take advantage of the U.S. market. In October, Cementos Argos purchased U.S. suppliers Southern Star of Dallas and Savannah, Ga.-based Concrete Express for a total $257.5 million�a move it heralded as the largest ever made by a Colombian company in the U.S.

Cementos Argos is the country�s largest cement producer and the fifth leading producer of cement in Latin America behind Cemex, Holcim, Votorantim, and Lafarge. It is the only company exporting cement from Colombia and approximately 80% of the product sent overseas goes to the U.S.

Based in Medellin, the company is a subsidiary of Cementos del Caribe and part of the Grupo Empresarial Antioqueno. Of the company�s estimated $805 million revenues for this year, 58% is from investments outside of Colombia. The company already has seen a 23% jump in earnings through the first three quarters of this year due to higher sales and investment income.

Part 2: After years of turmoil, Colombia is poised for big infrastructure spending.