MONTERRY (Bloomberg) — When Jonathan Shapiro was scouting for investments that might withstand the worst US housing decline in six decades, he found one he thought was solid enough to pour at least $12 million into: Cemex SAB.

Shapiro, who helps manage $1.1 billion at Kovitz Investment Group in Chicago, bought 483,095 American depositary receipts of the world's third-largest cement maker in September and is still buying. What sold him was the industry's ability to raise prices in the US even as demand for building materials drops.

"Even though concrete seems like a commodity and typically commodity companies don't have much control over price, they do seem to have more control over where pricing might go," Shapiro said.

Cemex's ADRs fell 16 percent this year as of yesterday, hurt by the deepening housing recession. Shapiro is betting the Mexican company will be among the first producers of building materials to rebound when the market recovers. Prices are still rising, and Cemex does most of its US business in fast-growing Sunbelt states such as Florida and California.

Shares of Cemex, based in San Pedro Garza Garcia, were down 18 percent this year before today on the Mexican stock exchange. The ADRs, traded on the New York Stock Exchange, reached a 2007 high of $40.82 in June before dropping as much as 38 percent to a low this year of $25.39 on November 19. Cemex's ADRs rose 29 cents, or one percent, to $28.06 at in New York Stock Exchange composite trading yesterday morning.

Cemex has been pounded along with US makers of wallboard, insulation, roofing materials and other products that are vulnerable to the housing market's slump. Unlike rates in the cement industry, however, wallboard prices have dropped 35 percent to $123 per thousand square feet from $188 a year ago, according to Chicago-based USG Corp.

Even as demand for cement declines, transport costs are fueling import prices in the US. It now costs as much as $90 a ton to ship cement, up from $16 in 2002, according to Ed Sullivan, chief economist with the Portland Cement Association in Skokie, Illinois. The country will still need to import more than 20 percent of the estimated 113 million tons to be used in 2007, he said.

France's Lafarge SA, the biggest cement maker in the world, and Switzerland's Holcim, number two, are among international companies that control 85 percent of the US cement market along with Cemex, Sullivan said.

Cemex is the most likely to benefit from a turnaround in the US housing market because it's the country's largest, Shapiro said. Expanding regions such as Latin America and Eastern Europe will aid that recovery, he said.

The US contributed 28 percent of Cemex's $6.1 billion in revenue in the third quarter, and the company said in October it plans to raise cement prices at least $3 to $6 a ton there in March and April. Right now the industry average in the US is $105 to $108, according to Michael Betts, a building materials analyst for J.P. Morgan Securities in London.

Cemex's third-quarter operating income rose 15 percent to $940 million from a year ago even as US cement shipments declined one percent. Earnings benefited from its $14.2 billion purchase of Chatswood, Australia-based Rinker Group in July. Without the acquisition, US cement shipments dropped 18 percent.

Most of Cemex's US sales come from Florida, California, Texas and Arizona. Population growth and construction in those states are expected to outpace the nation's average, Betts said.

"These states might be suffering at the moment, but they will come back again," he said. "Those are all good markets to be in long term."

In the meantime, the company aims to boost prices by $12 a ton in Florida. Demand there has dropped 30 percent this year, Sullivan said.

"Pricing will be resilient," said Gilberto Perez, president of Cemex's US operations, in an October 26 conference call. "There is still some uncertainty on the amount we're going to get and the timing."

Pricing is even stronger for aggregates — crushed rock that's mixed with cement to make concrete — because the material is in short supply in markets such as Florida and California, according to Betts.

In Florida, residents oppose new quarries near their homes, and the bulky rock is now being shipped from as far away as Mexico's Yucatan Peninsula. In July, a federal court ordered three companies, including Florida Rock Industries, to shut down quarries in the Lake Belt area.

Cemex, which expanded its aggregates business in the US with the Rinker purchase, plans to raise those prices in Florida by $5 a ton in January. Aggregates sell for as much as $15 a ton there, more than double what they cost in the rest of the US.

Cheap Asian cement, which can cost as little as $30 a ton in China, had been helping to keep US cement prices in check before the increase in shipping costs steepened in 2005. Unlike during recessions in 2001 and the early 1990s, prices aren't dropping along with volumes, Betts said.

"This time around we're just seeing the volumes decline," said Betts, who has a "buy" rating on Cemex and projects the ADRs will advance to $42 by June.