Pit & Quarry, October 2015

Aggregate production up 5 percent in first half of year A ccording to the U S Geological Survey USGS an estimated 607 million metric tons Mt of total construction aggregates were produced and shipped for consumption in the United States in the second quarter of 2015 Thats a 3 percent increase compared to the total number of aggregates produced and shipped in the second quarter of 2014 The estimated production for consumption in the first six months of 2015 was 994 Mt according to USGS Thats a 5 percent increase compared to the same six month period of 2014 The estimated production for consumption of construction aggregates in the second quarter of 2015 decreased in four of the nine geographic divisions measures compared with that sold or used in the second quarter of 2014 In addition production for consumption increased in 24 of the 43 states that were estimated with the five leading states in descending order being Texas California Pennsylvania Michigan and Ohio In addition USGS reports an estimated 360 Mt of crushed stone were produced and shipped for consumption in the U S in the second quarter of 2015 Thats a 5 percent increase compared to the second quarter of 2014 The estimated production for consumption in the first six months of 2015 was 589 Mt so this years first half produced 6 percent more results than 2014 s first half According to USGS the estimated production for consumption of crushed stone in the second quarter of 2015 decreased in two of nine geographic divisions compared with that sold or used in the second quarter of 2014 However production for consumption increased in 32 of the 46 states that were estimated with the five leading states being Texas Pennsylvania Illinois Ohio and Kentucky Finally the estimated U S output of construction sand and gravel produced and shipped for consumption in the second quarter of 2015 was 247 Mt Thats a slight increase compared to the second quarter of 2014 USGS reports the estimated production for consumption in the first six months of 2015 was 405 Mt a 4 percent increase compared to the same time period of 2014 The estimated production for consumption of construction sand and gravel in the second quarter of 2015 decreased in five of the nine geographic divisions compared with that sold or used in the second quarter of 2014 Additionally production for consumption decreased in 24 of the 45 states that were estimated The five leading producers in the second quarter were California Texas Michigan Minnesota and Arizona AGGREGATES FORECAST Employment state a progress indicator The United States is at full employment as unemployment is at 51 percent This is the lowest rate in eight years and its low enough for the Federal Reserve to consider the rate full employment While it may not feel like full employment and some may say 51 percent isnt full count me in with that crowd it does mean weve made a lot of progress in the last five years As a result federal tax receipts are now at record levels and state and local receipts are not far behind in most areas Something is different though Most of the new tax receipts will not go toward new infrastructure programs Two categories of spending will soak up most of the new money health care and pensions If this is true it means only modest increases in nonbuilding activity our forecast Another way to say this is that the historical ratios of spending are changing and that infrastructure needs will continue to be unmet and grow The demand for construction materials from the private DCG Inc U S Aggregates Forecast billions of metric tons 2010 2011 2012 2013 2014 2015est 2016est RESIDENTIAL 039 038 043 039 048 056 055 NON RESIDENTIAL 070 069 068 060 065 070 072 NON BUILDING 89 091 091 105 106 105 107 TOTAL 198 198 202 204 219 231 234 Yr Yr Ch 00 20 10 74 55 13 segments residential nonresidential is improving nicely Both segments are now moving higher from very low levels Residential demand is not booming due to slow household income growth and lack of enough savings for 20 percent down payments Nonresidential demand is not even higher due to slow employment growth high vacancy rates and tight lending requirements All of these areas are getting better but theyre improving slowly not rapidly David Chereb Dr David Chereb has many years of experience forecasting construction materials and his web based forecasting models have captured every major turning point in materials demand for more than 15 years Chereb received his Ph D in economics from the University of Southern California He can be reached at david chereb@ sc marketanalytics com 8 PIT QUARRY October 2015 www pitandquarry com