Importing cement

There is much talk about the amount of cement imported by the U.S. So how much cement do we import? This year, the United States is expected to import 27 percent of its cement, or 33 million tons, according to the Portland Cement Association. Last year, the United States imported 23 percent of its cement, up from 20 percent in 2003. Given the number of pending construction projects versus cement capacity, we're going to have to import even more to meet future needs. Maybe we could import some from Iraq. Your comment?

ARTBA predicts growth

Next year should be a good one, according to the the American Road & Transportation Builders Association (ARTBA). Spurred by a combination of renewed economic growth, emergency repair work following Hurricane Katrina and SAFETEA-LU, the U.S. highway construction market should grow 5.4 percent in 2006 according to ARTBA Vice President of Economics & Research William Buechner. The real question, however, he says, is how much of the growth will be absorbed by rising construction costs. The value of construction work performed on highway and bridge projects is projected to be a record $70.3 billion in FY 2006, up from $66.9 billion in FY 2005. Your comment?

Cement in Iraq

Iraq may be aiming to become a major international cement producer in the future -- but they'll have to take care of their own needs first. The government has issued licenses for the construction by private entrepreneurs of 20 new cement plants, according to the minister of industry and minerals. The minister, Osama al-Najafi, said the plants, which will cost $4 billion, will be built across the country. He said the construction of these plants, to be completed in two years, will add 25 million tons to Iraq’s annual cement output. He estimated Iraq’s needs at 30 million tons annually. Unlike other countries in the Middle East, Iraq has significant limestone reserves, giving it the potential to become a competitive and low-cost producer of cement. Your comment?

Happy Thanksgiving

The Pit & Quarry Editor's Blog is heading on vacation for Thanksgiving. Please check back on Monday November 28 for my next post. Happy Thanksgiving to you.

They're in luck

It's rare to hear about a greenfield operation these days. But Luck Stone Corporation announced the opening of its Massaponax Plant on State Rt. 1 in Spotsylvania County, Va., located next to the River Run Business Center, a newly constructed office park developed by Luck Properties, the real estate development division for Luck Stone. The Massaponax Plant is the first greenfield site that Luck Stone has opened in Virginia since the early 1990's, and is one of two plants the company operates in Spotsylvania County. Congratulations to Luck Stone on their latest operation. Your comment?

New contact info

Pit & Quarry has moved! After more than 30 years in the suburbs of Cleveland, we have moved downtown to the Fifth/Third Bank Building. My new phone number is 216-706-3725. Our new address is:

Pit & Quarry
600 Superior Avenue East
Suite 1100
Cleveland, OH  44114

Stop in for a visit sometime. Your comment?

Housing goes south

Output at the nation's factories, mines and utilities rose at the fastest pace in 17 months in October, posting a solid rebound from the devastating Gulf Coast hurricanes, according to recent reports. The Federal Reserve reported that industrial output was up a healthy 0.9 percent last month as refineries and oil and natural gas platforms began production again after widespread shutdowns caused by hurricanes Katrina and Rita. But home construction plunged by 5.6 percent in October, providing dramatic evidence that rising mortgage rates are beginning to dampen the housing boom. The October decline in housing, the biggest since a 17.7 percent drop last March, showed a slowdown in both single-family and apartment construction. In a sign of potential weakness in the future, the number of building permits issued in October dropped by 6.7 percent to an annual rate of 2.07 million units. Your comment?

Unfair to Florida Rock

Wow. Florida Rock's stock took a plunge last week. It's climbing back up now, currently in the high 40s. But what precipitated the company's 5.3 percent decline last Tuesday and 5.6 percent fall last Wednesday? The company said "it was not aware of any event in its business to explain a steep drop in its stock price over the past two trading days." In retrospect, other aggregates companies took a bit of a hit as well, but there is no good reason investors should have bailed on Florida Rock. With a market area that is expected grow by leaps and bounds over the next five years -- both from building and RE-building -- Florida Rock is well positioned to make great strides. My recommendation: Buy. Hold. Your comment?

Fixing Virginia's roads

Virgina Gov.-elect Tim Kaine recently held his first "town hall" meeting on transportation, which he called "the most urgent issue" facing the state. "Urgency requires that Virginia's transportation problems be addressed in 2006," Kaine said, laying down an agenda for the General Assembly session that starts in January. Some House of Delegates members already have supported a no-new-tax path for next year that may collide with a comprehensive state senate transportation package that could require billions in new funds. At least the new governor's thinking is on the right path. Your comment?

Depressed about diesel?

Diesel fuel prices are killing aggregates operations. I found an amusing article in an issue of Pit & Quarry from 1981. There was much consternation because diesel had risen from 15-cents-per-gallon in 1971 to 85-cents-per-gallon in 1979. The article predicted, with much forboding, that in the future the price would hit $1.45 per gallon. Damn, that sounds like a gift heaven right now, doesn't it? Your comment?

Need cement up north

The cement shortage is taking its toll in Canada, but not for the reasons you might think. "We've had a 20% increase in demand over last year," says Ron Sills of Lehigh Inland Cement Ltd. "It isn't that there's a shortage of cement; there's been an unpredictable surge in major construction projects." The $30-billion Canadian Natural Resources Ltd. project north of Fort McMurray is likely to gobble up a significant portion of Alberta's cement output for the foreseeable future, according to sources. "These mega projects use a lot of cement ... we can't just snap a finger and come up with 20% more product," Stills says. "We're already running 24-7, nearly all year." Nice problem to have -- but it's still a problem. Your comment?

Vulcan Materials 3Q report

Vulcan Materials Co. announced record net sales of $749 million and record net earnings of $122 million, or $1.17 per diluted share in the third quarter. These amounts represent a 15 percent increase in net sales and a 23 percent increase in net earnings from the prior year’s levels. According to Vulcan's CEO Don James, "Overall demand remains strong and aggregates pricing gains achieved thus far in 2005 provide momentum as we move into 2006. Our challenge is to continue to achieve productivity improvements in order to meet increased demand and offset higher costs for energy and materials. Energy-related costs have become particularly acute since Hurricane Katrina in late August. For the fourth quarter, we expect diesel fuel costs to increase approximately $13 million from last year’s fourth quarter." Your comment?

Martin Marietta 3Q report

Martin Marietta Materials, Inc. announced financial results for the third quarter and nine months ended September 30, 2005, reporting record net sales, net earnings and earnings per share. Heritage aggregates pricing up was 9%, volume up 4.5%, and the aggregates segment achieved an operating margin of 22.5%. Stephen P. Zelnak, Jr., Chairman and CEO of Martin Marietta Materials, said, “We had an outstanding third quarter that produced record results despite rising energy costs and the effects of Hurricanes Katrina and Rita. In our aggregates business, we experienced an increase in demand and strong pricing, which, coupled with good cost management and higher gains on assets sales, led to a 300-basis-point improvement in our aggregates segment’s operating margin. Shipments and pricing were generally strong across all markets, with infrastructure and commercial construction continuing to provide increasing demand. Rising diesel fuel prices negatively affected earnings by $0.11 per share when compared with the prior-year quarter. Your comment?

Lafarge 3Q report

When is down, up? The answer to that riddle is found in Lafarge North America's third-quarter earnings report. The Aggregates, Concrete & Asphalt segment reported operating income of $133.7 million in the quarter, an increase of 2 percent compared with income of $131.4 million during the third quarter 2004. Aggregate shipments totaled 41.9 million tons during the quarter, 5 percent below 2004 levels primarily due to volume declines in eastern Canada and the Great Lakes markets. Canadian shipments declined 4 percent to 21.8 million tons, while U.S. shipments decreased 6 percent to 20.2 million tons. Volumes remained strong in both western Canada and western U.S. as residential and commercial construction has continued to grow, particularly in the Alberta and British Columbia markets. Average aggregate selling prices were up 6 percent compared with the year ago quarter, reflecting the successful implementation of a second price increase in key markets during the year. So in a few words: Volume is down, income is up. Your comment?

The Irish are coming!

Sean Carr's Irish eyes are smiling. Pit & Quarry's Notre Dame-loving publisher tells us that CRH plc, the Irish building-materials company, has acquired the aggregates, asphalt, paving and construction assets of the Mountain Companies, located in eastern Kentucky, southwest Virginia and along the Kentucky/West Virginia state line for a cool $413 million. With permitted reserves of over 400 million tons at eight quarries and one sand & gravel pit, Mountain produces approximately 5 million tons of aggregates and 2 million tons of asphalt annually. CRH has also acquired 50% of Bizzack, Inc., Mountain's heavy construction affiliate. Your comment?

Cranking the rumor mill

Earlier this year, it was reported that Lafarge may be in a buying mood, after freeing up a pile of cash from Canadian operations. Now, a rumor out of the U.K., says the company may have a specific target in mind. "Rumours around Hanson have intensified, particularly since it has its asbestos liability under control. Lafarge is seen as the stalker," reads a line from a finance article. Hmmmmmm, that would create one large construction-materials conglomerate, wouldn't it? Your comment?

Asphalt on the move

According to a new study from The Freedonia Group Inc., a Cleveland-based industrial market research firm, demand for asphalt products is forecast to advance 1.2 percent annually to 38.8 million tons in 2009, valued at over $12 billion. This will generate demand for 215 million barrels of primary asphalt, the vast majority of which is refinery asphalt. Gains will derive from expanding demand for asphalt paving products, which will benefit from new highway and road spending; and growth in demand for asphalt roofing products, which will benefit from recovery in nonresidential building activity. Your comment?