Pit & Quarry, May 2012

EDITED BY DARREN CONSTANTINO Congress extends transportation bill through June 30 T he U S Senate has passed by unanimous consent a 90 day extension of the highway bill which passed 266 to 158 in the House Before passage Senate Environment and Public Works Committee Chairman Barbara Boxer D Calif asked unanimous consent to amend H R 4281 and substitute the text of the Senate passed bill says the National Stone Sand Gravel Association But Senate Minority Leader Mitch McConnell R Ky objected This procedure was repeated by Sens Ben Cardin D Md Sheldon Whitehouse D R I and Mary Landrieu D La with McConnell objecting each time The action extends the current surface transportation programs through June 30 Martin Marietta Vulcan ruling pending at press time The Reuters news agency reports that the judge presiding over the case of Martin Marietta Materials hostile bid for Vulcan Materials called the fight a hall of mirrors He also said he was unlikely to rule immediately and it was unsure at press time when a ruling would be announced The two sides made their closing arguments to Chief Judge Leo Strine who also must decide if a proxy contest for four seats on the Vulcan Materials board of directors AGGREGATES FORECAST Aggregates demand to increase sharply after 2013 The drop in aggregates consumptio n during the past five years has been unusually large owing to the recession of course and the sharp decline in aggregates intensity Aggregates intensity has dropped by more than 37 percent since 2006 No doubt the high intensity level of 2006 was unsustainable but the low level we have today is also unsustainable Note We are using Aggregates Employment as a measure of intensity Aggregates Employment equals aggregates volume divided by the level of U S employment For example in 2008 U S aggregates consumption was 24 billion metric tons and total U S employment was 1452 million workers The ratio is 165 and is shown as aggregates intensity the amount of aggregates used per employee The low aggregates intensity level in 2012 is one reason we are near a bottom in aggregates demand The low volumes for 2012 2013 in our forecast are due to the continuation of low intensity values The slowdown in nonbuilding work which has a higher aggregates intensity ratio is the main reason for the low current levels Since we think nonbuilding will be a lagging can proceed Reuters says the judge spent much of the six hour hearing prodding Martin Marietta Materials lawyer over the way his client disclosed nonpublic information such as history of the merger talks Your briefs dont come close to justifying the blow by blow disclosures the judge reportedly said Were not going to get where you want by acting like Im a fool he added after the lawyer suggested the disclosures were required by regulators Aggregates Employment Ratio 25 20 15 10 5 0 212 197 165 139 143 141 133 2006 2007 2008 2009 2010 2011 2012est segment for construction activity for the next two years aggregates demand remains in a holding pattern When state and local budgets regain their balance as the economy recovers the intensity ratio will once again move up By 2016 the intensity level will recover to near its 2008 level This means aggregates demand will increase strongly after 2013 as aggregates plays catch up to higher economic output David Chereb David Chereb has many years of forecasting construction materials He received his Ph D in economics from the University of Southern California He can be reached at dc@ davidcherebgroup com 4 PIT QUARRY May 2012 www pitandquarry com