Driven by Katrina and now Rita, higher prices are rolling through the building and construction business, affecting both consumers and investors.
Even before Hurricane Katrina hit, aggressive buyers began bidding up the shares of Caterpillar Inc., figuring bulldozers and backhoes would be needed for the cleanup. Caterpillar stock is up almost 10 percent since before Katrina.
Storm warnings were sufficient to trigger higher prices for cement, wallboard, lumber, plywood, plastic pipe and other building materials, which have continued to rise.
Among the sharpest spikes: a 50 percent jump in the price of oriented strand board, the glued-together panels of wood chips that have replaced plywood for much construction.
If you're building a home or remodeling one, your materials budget could be hit as hard as your gasoline bills have been.
Building materials prices are rising not only because reconstruction will boost the demand for those products but also because production facilities along the Gulf Coast were knocked out by the storms.
As the prices of products have jumped, so too have the stocks of companies such as Georgia-Pacific Corp., Louisiana-Pacific Corp. and Weyerhaeuser Co., the nation's biggest suppliers of lumber, plywood and other wood products.
But investors have been cautious about the stock of one Washington area company that seems an obvious beneficiary of the rebuilding work -- Lafarge North America Inc., the largest supplier of cement in the United States and Canada and a major producer of concrete, wallboard and rock for construction.
With its headquarters in Herndon, low-profile Lafarge is the North American offshoot of the world's biggest cement manufacturer, Lafarge SA of France. The French parent owns 56 percent of Lafarge North America, which has operations in every Canadian province and all but a handful of states.
Lafarge stock spiked more than $3 a share to just under $69 on Aug. 31 after Katrina stormed ashore but had receded to $63.72 by the close of trading Friday.
Lafarge is both a beneficiary and a victim of the storms. It has three cement terminals in the New Orleans area that were hit by Katrina and closed down.
A cement barge that had been tied up at one Lafarge facility was swept away and ended up sitting in New Orleans's devastated Lower Ninth Ward.
Lafarge Director of Media Relations Peggy Disney said two of the three terminals were back in operation as of Friday, before Hurricane Rita made landfall, along with 12 of the company's 15 ready-mix concrete plants in Louisiana.
Other Lafarge facilities along the Gulf Coast suffered only minor damage from Katrina.
"We've made substantial progress getting our facilities in the region back up and running," Disney said. "We are meeting the demands of our customers."
Cement was in short supply even before the hurricane season began. Because of the housing boom and highway construction, U.S. consumption of cement is running at record levels.
The result has been rising prices and rising profits for Lafarge. Second-quarter revenue was up 19 percent to $1.17 billion from a year earlier.
Because strong demand enabled the company to boost prices, profits increased by 40 percent, to $143 million.
Demand for cement will grow even stronger because of the storms, says Ed Sullivan, chief economist of the Portland Cement Association, the industry's trade group.
Normally, hurricanes blow the tops off buildings, making roof replacement a top priority. But, Sullivan noted, "water is responsible for most of the structural harm in New Orleans. Because of this bottom-up damage, high-concrete-intensity building sections like basements and foundations will need replacement. In addition, more non-residential buildings than normal were damaged by the floodwater and will need replacement."
Plywood is a standard business barometer for hurricanes. Home centers and lumber yards often sell out before the storm as people board up homes and business. Then demand jumps immediately afterward as survivors patch holes in their property with plywood panels. As plywood goes, so go other building supplies.
Nonetheless, Katrina won't produce an immediate boom in construction work, said Ken Simonson, chief economist for the Associated General Contractors of America, an Alexandria-based trade association that represents big construction companies.
"There was massive total destruction of property," he said. "There will not be that surge in demand" because there will be months of cleanup work before reconstruction can begin.
Meanwhile, thousands of construction workers in the region are out of jobs because their projects are shut down. Simonson spoke before Rita made landfall, so he could not address its impact, but demand for building materials was so strong before the storms that the impact on prices will not be delayed, he added.
Simonson offers a contrarian view on lumber, pointing out that millions of trees have been downed in the South and many of them can be salvaged for lumber. That, ironically, could bring down lumber prices in the region.
But that's the only building product that might dodge higher prices.
Take polyvinyl chloride pipe, the white PVC used for plumbing lines. The price has doubled and may double again, Simonson said. Wallboard prices have been going up at double-digit-percentage rates for the past two years and will go even higher.
Before the storms, he added, so much cement was being poured in the United States that domestic plants couldn't keep up with the demand. Spot shortages were reported in two dozen states and the District of Columbia. Imports grew from 20 percent of the market to 26 percent in the first half of the year.
Facing even higher demand, the Associated General Contractors is lobbying to temporarily lower the stiff import duties on Mexican cement, which can be shipped into Texas and Louisiana cheaply by barge.
Lower cement tariffs generally are opposed by the U.S. cement industry, and Lafarge's spokeswoman declined to comment on the issue.
But as part of the biggest cement producer in the world, Lafarge North American can import cement from just about anywhere.
And once Gulf Coast reconstruction gets moving, the Herndon company ought to be able to sell all the cement it can get -- at steadily rising prices.