Thursday, June 28, 2007

Aggregates production falls hard


An estimated 255 million metric tons (Mt) of crushed stone was produced and shipped for consumption in the United States in the first quarter of 2007, a decrease of 21.6% compared with that of the same period of 2006, according to the latest production figures released by USGS. The estimated U.S. output of construction sand and gravel produced and shipped for consumption in the first quarter of 2007 was 179 Mt, compared with 221 Mt in the same period of 2006. An estimated 434 Mt of total aggregates was produced and shipped for consumption in the United States in the first quarter of 2007, compared with 547 Mt in the same period of 2006. "During the first quarter of 2006, there was a large increase in aggregates production owning to the combination of favorable weather and strong demand that the industry did not experience again in 2007," says Jason Willett, crushed stone commodity specialist. "Severe winter weather conditions in some areas and lower aggregates demand from residential construction were the main causes of lower aggregates production during the first quarter of 2007. Until the residential construction markets recover, aggregates production will most likely continue to be lower than that of 2006." Your comment?

Labels: , , ,

Monday, June 25, 2007

Economic growth


According to Reed Construction Data's latest Building Team Forecast, real (inflation-adjusted) U.S. economic growth fell to 0.6 percent (annualized) in the winter quarter, under pressure from the housing collapse and persistently high energy prices, which led to a short period of manufacturing and distribution inventory surpluses. Gross Domestic Product (GDP) growth will recover to a 3 percent pace by the end of the year and through 2008. Although the rebound is still fragile, there is little risk that it will be unsuccessful. The huge service sector of the economy is booming, especially financial and professional office-based services. The strong growth in both exports and business investment paused during the winter, but are already expanding quickly again. More than a year of sub-par growth has created slack in the economy, although not in non-residential construction, which assures steady credit costs and some lessening of materials and wage inflation. Inevitably, the period of relatively slow economic growth also saps demand for building space and facilities and will cause a similar slow period ahead for starts of non-residential buildings. Energy prices, while still high, are no longer rising and are likely to fall marginally for the rest of the year. Housing starts appear to be at the low point for this cycle, although a few more months of small declines are possible. Starts were balanced with completions in April, but need to fall slightly to line up with permits and a small excess of units under construction. Factory production has been rising since February and manufacturers’ inventories began climbing in April. This time the rise is to refill the distribution pipeline and not due to unexpectedly low sales as happened about a year ago. Your comment?

Labels: , , ,

Wednesday, June 20, 2007

Materials prices


According to the Portland Cement Association, Concrete prices in May remained nearly flat for the second straight month with a modest 0.1 percent gain, according to the Bureau of Labor Statistics' Producer Price Index. Steel and asphalt declined, 1.3 percent and 0.2 percent, respectively, but remain at high levels with steel prices increasing 13.9 percent during the past year. Asphalt prices rose 11.2 percent in the last 12 months. Concrete prices have changed at a slower rate, with a 4.5 percent increase since May 2006.. Lumber prices continued to decline with a 12.5 percent negative change from 2006. According to the spring PCA Cement and Construction Forecast, the relative price improvements of concrete compared to other materials that materialized during the fourth quarter of 2006 and has continued through recent data collections, will increase national cement intensity in 2007. Cement intensity refers to the tons of cement per dollar of construction activity. Your comment?

Labels: , , ,

Monday, June 18, 2007

Fatality #12


On June 12, a 45 year-old contractor, with 10 years construction experience, was fatally injured at a surface crushed stone operation. The construction contractor had been hired to complete reclamation on a waste dump. The victim entered a trench and was struck by a large section of clay when a vertical wall of the trench collapsed. According to MSHA, it is the 12th metal/nonmmetal fatality of the year. Click here for a full report. Your comment?

Labels: , , ,

Wednesday, June 13, 2007

Quarries at risk?


On April 9, according to NSSGA, the Department of Homeland Security (DHS) published an interim final rule applicable to a broad range of facilities considered to be at high risk for terrorist attacks. This rule requires facility owner/operators to complete an on-line screening assessment (due by August 7, 2007) to determine their facility’s level of risk. The presence or amount of any Appendix A (6 CFR 27) chemicals must complete the top-screen analysis, even if one of the chemicals is present in the smallest amount. DHS will review this information and make a determination as to whether a facility presents a “high level of security risk.” DHS will notify the facilities if it presents a high security risk and which tier the facility falls into (Tiers 1-4, with Tier 1 posing the greatest risk). Owners of facilities preliminarily qualifying as high risk (after conducting the on-line screen assessment) must prepare and submit an assessment of vulnerabilities and a site security plan. These submissions will be validated through DHS audits and inspections. Your comment?

Labels: , , ,

Friday, June 08, 2007

Cemex and Rinker pair up


Cemex has finally concluded details for its marriage to Rinker after a long and stormy courtship. The deal, the largest ever in the construction materials industry, tops out at $14.2 billion. Rinker said that shareholders accounting for 52.7 per cent of its shares had agreed to tender, making the takeover offer unconditional. Cemex urged remaining shareholders to endorse the offer in coming days rather than stay as minority holders, according to news sources. Newspapers in Florida and Arizona speculated about the loss of jobs, and possible plant closings, amidst the regulatory obligations of the deal. Look for additional news analysis of the merger in the coming months. Your comment?

Labels: , , , ,

Friday, June 01, 2007

April spending highlighted


"Total construction spending inched up in April, as nonresidential outlays shook off the plunge in homebuilding and sluggishness in gross domestic product (GDP)," Ken Simonson, Chief Economist for The Associated General Contractors of America (AGC), said. Simonson was commenting on the May 31 construction spending and GDP reports from the Commerce Department.

"Total construction spending eked out a gain of 0.1 percent in April, seasonally adjusted, but fell 2.5 percent for the first four months of 2007 compared to the same period in 2006," Simonson observed. "Over both periods there was a nearly symmetrical split between residential and nonresidential spending. The former fell 0.9 percent for the month and 15 percent year-to-date, while the latter rose 1.1 percent in April and 14 percent year-to-date.

"Even though GDP grew only 0.6 percent net of inflation in the first quarter, many nonresidential construction categories are catching up from past inactivity or building for the long-term. For instance, construction of hotels and resorts, which nearly stopped early in the decade, jumped 4.5 percent in April and 56 percent in the first four months of 2007 combined. Other big year-to-date private-sector gainers included offices, up 32 percent; communication, 19 percent; and hospitals and multi-retail (general merchandise stores, shopping centers and malls), both up 18 percent. I think many of these categories will remain robust through 2007, although retail and office construction are vulnerable to a slowdown.

"Spending in every public category was at least five percent higher in the first four months of 2007 than in the January-April 2006 period," Simonson noted. "The two big public categories--highways and streets, and education--accounted for just over half the public total. Highway construction was 12 percent higher year-to-date, and education was up 8.3 percent. For 2007 as a whole, public construction should remain positive, but higher materials costs are likely to cut into the number of contracts that agencies can award.

"Private residential spending figures were universally negative in April," Simonson commented. "Single-family construction ticked down less than 0.1 percent for the month but was 27 percent lower over the first four months of the year than in the same period of 2006. Multi-family was down 1.8 percent in April, although the year-to-date figure is still up by 1.2 percent. Residential improvements, which Commerce unfortunately does not break out monthly, slipped 2.5 percent for the month, although it's up 15 percent year-to-date. I'm afraid multi-family will continue to weaken, and single-family won't improve until 2008." Your comment?

Labels: , , ,