Pit & Quarry, May 2010

Martin Marietta Vulcan turning the corner Martin Marietta and Vulcan Materials reported down quarters compared to the first quarter of 2009 owing mostly to bad weather in January and February but both said aggregate shipments were up in March and April compared with last year Martin Mariettas heritage aggregates product line volume increased 9 percent for March the first month of volume growth compared with the prior year month in the past several years the company reported This improvement in shipments coincided with the initiation of the construction season and is being largely fueled by infrastructure projects funded by stimulus as money is reaching the states and projects are beginning Martin Marietta President and CEO Ward Nye said Martin Mariettas heritage aggregates product line was still down 12 percent for AGGREGATES FORECAST EDITED BY BRIAN RICHESSON the quarter compared with the prior year period and pricing was down 3 percent compared with the prior year quarter Vulcans aggregates shipments in March were 4 percent higher than in March of the prior year the first year over year monthly increase in four years the company said This pattern continued in April as aggregates shipments were 9 percent higher than the prior years level with increases in most key markets For the quarter aggregates shipments declined 14 percent while the average price for aggregates increased 1 percent The overall economy is improving Vulcan Chairman and CEO Don James said Leading measures of economic activity such as real gross domestic product GDP industrial production and singlefamily housing starts have improved in recent months 35 30 25 20 15 10 05 00 Billion Metric Tons Aggregates UNITED STATES Level Upcoming Events NSSGA Noise Dust Workshop June 22 24 Calera Ala Hillhead 2010 June 22 24 Buxton England RAM Inc Blasting and Explosives Safety Training Sept 8 10 Rapid City S D NSSGA Annual Convention March 21 24 2011 Las Vegas ConExpo Con Agg March 22 26 Las Vegas 2005 2006 2007 2008 2009 2010 2011 2012 product ratio Actual Total The exact impact is uncertain as we expect major policy changes before 2015 but for now the impact is negative David Chereb The chart shows the DCG Inc forecast of total U S aggregates consumption for 2010 2012 from our county based online aggregates model After three years of declines we are forecasting an increase in aggregates consumption this year of 69 percent due mainly to higher nonbuilding volumes as a result of the federal stimulus program In addition residential volumes also increase from their very low level as the economy recovers and mortgage rates remain moderate Nonresidential activity continues to decline this year and doesnt provide any boost to demand until well into 2011 Since this forecast only goes out to 2012 there is very little impact from the new healthcare law or the impact of the ending of the stimulus program In our longer term forecast these items do impact aggregates demand when long term interest rates move upward as a consequence of a much high debt gross domestic David Chereb has many years of experience forecasting construction materials He received his Ph D in economics from the University of Southern California He can be reached at dc@ davidcherebgroup com 6 PIT QUARRY May 2010 www pitandquarry com