A New Study Predicts The North American Aggregates Market Will Be A Global Area Of Growth Through 2017.
By Mark S. Kuhar
The North American aggregates market – and other world markets – took a big hit during the great recession – and have been struggling to make up ground ever since. But according to Gleb Mytko, an analyst from Cleveland-based The Freedonia Group, things are going to change for the better.
Following historic declines from 2007 to 2012, aggregates demand is expected to rebound. Through 2017, worldwide sales of construction aggregates are forecast to expand 5.8 percent per year to 53.2 billion metric tons (Gt). The market is predicted to expand further to 66.2 Gt by 2022.
“The figure for global aggregates demand is based on data for all regions worldwide,” Mytko said. “Demand is calculated for North America, Western Europe, the Asia/Pacific region, Central and South America, Eastern Europe, and the Africa/Mideast region. The worldwide figure in metric tons is based on the total for all of these regions. The average price is based on complex calculations. I estimated prices for a wide range of countries. I then calculated their share of the global market and estimated prices for other countries. All of these figures were compiled and the value of the global construction aggregates market was calculated.”
According to the study, Asia is still one of the world’s hot spots.
“The global market will continue to be driven by above average growth in the large Asia/Pacific and Africa/Mideast regions,” Mytko said. “The nonbuilding market for construction aggregates is expected to outperform the building segment through 2017, as many countries will invest heavily in their public infrastructures. Crushed stone is expected to account for over one-half of all new product demand generated between 2012 and 2017.”
Between 2012 and 2017, more than 50 percent of all additional construction aggregates demand will be attributable to China, where massive gains in building and nonbuilding construction activity will stimulate sales. As the Chinese market matures, growth is expected to decelerate noticeably from the breakneck pace of the last decade. Aggregates consumption in India, the Asia/Pacific region’s second largest market, will expand at a somewhat faster pace than China through 2017.
Residential, commercial and public works construction activity will rebound, generating additional demand for aggregates, according to Mytko. Eastern Europe and North America will record somewhat faster growth than Western Europe during the 2012-2017 period. In terms of major countries, Spain, Russia, the United States and Italy are expected to perform particularly well, due to a considerable amount of pent-up aggregates demand in these markets, Mytko said.
For the purposes of the study, the North American market included the United States, Canada and Mexico.
The construction aggregates markets of Eastern Europe, North America and Western Europe are projected to expand between 3 and 5 percent per annum through 2017. North America specifically is predicted to grow at a rate of 4.2 percent annually. Looking even further through 2022, the study envisions a North American market that accounts for 4.4 billion metric tons of aggregate produced.
As these regions recover from financial and fiscal crises, Mytko elaborated on why the North American market will see stronger growth.
“The construction aggregates market in North America is forecast to register faster growth than Western Europe because the U.S. will register larger gains through 2017,” he said. “A significant increase in both economic and construction activity will boost consumption. Growth in Mexico’s construction aggregates market is expected to accelerate as well. In contrast, many of the biggest markets in Western Europe are expected to record only modest growth, including Germany, France, and the UK. Even though consumption is expected to rebound in Spain, Italy and other West European countries that experienced sizeable losses, construction aggregates demand will still be well-below the 2007 level.”
In North America, expenditures on construction are predicted to see substantial increases. By 2017, $816 billion will be spent on residential construction; $495 billion on nonresidential construction; and $719 billion on nonbuilding construction.
Aggregates demand is expect to reach 7.7 million tons per capita, up for 6.6 million tons per capita in 2012.
Growth by Product Type
Globally, crushed stone production is predicted to grow by an average of 7.7 percent annually, according to the study. By contrast, sand production is only expected to grow by an average of 3.9 percent annually.
“Sand is forecast to register somewhat slower growth than crushed stone and gravel because of historical patterns,” Mytko said. “Sand generally experienced slower gains between 2002 and 2012 than its counterparts because reserves will be depleted at a slightly faster pace than reserves of crushed stone. The type of construction activity that will be carried out is also expected to impact demand for specific construction aggregates products. Alternative, secondary and recycled aggregates are expected to register faster growth than sand because of their lower price and increasing availability. Environmental regulations will also boost demand for these products.”
The other product segment singled out, gravel, is predicted to grow by an average of 4.7 percent annually through 2017.
By application, growth in material used for concrete will expand by 5.8 percent annually; for road base 5.6 percent annually; and for asphalt products, 3.3 percent annually.
In the World Aggregates Study, demand for construction aggregates in Central and South America is broken out. The market in Brazil, which totaled 800 million metric tons (Mt) in 2012, is examined in detail. Demand is also presented for Argentina and Colombia, but is not broken out in terms of markets, applications and products. Central and South America is expected to grow at a healthy pace through 2017.
The “Other Markets” section of the report includes Central and South America, Eastern Europe, and the Africa/ Mideast region. A number of countries are broken out for these regions, including Brazil, Russia, Poland, Turkey, Iran and Saudi Arabia.
Mytko qualified his predictions with a caution on events that could disrupt production gains. “Construction and economic activity in the U.S. may not rebound as fast as is expected, which could potentially hurt consumption,” he said. “Also, a lot will depend on the public infrastructure projects that are carried out between 2012 and 2017 because nonbuilding construction applications account for the majority of aggregates sales in the U.S.”
The historical numbers in this study are based on published government data, company information, and various Freedonia indicators. The growth rates through 2017 and 2022 are based on a variety of factors, including historical patterns; construction spending indicators; economic growth forecasts; company data; and paved road, hydraulic concrete and asphalt demand indicators. For more information on the study, contact The Freedonia Group at www.freedoniagroup.com.