The Mineral Baby returns

Last year, every person in the United States needed more than 23 tons of minerals and energy fuels to maintain their standard of living, according to the Mineral Information Institute (MII). “With the life expectancy in the U.S. now averaging 77.9 years, this means that the average American will need to have 3.6 million pounds of resources to be mined to provide the products and materials they will depend upon in their lifetime,” said President Nelson Fugate. “The population of the U.S. is 302 million people, so this means that last year, nearly 7 billion tons of different rocks and minerals had to be mined somewhere to make the things we use in everyday living.” Decreases in construction projects in 2007 caused a reduction of nearly 1,500 lbs. per person in the consumption of mineral and energy resources, the majority of it aggregates and cement. During the last 15 years, the per person consumption of minerals has fluctuated from 45,500 lbs./person/yr. (2003) to 48,427 lbs./person/yr. (1999), but there are 32 million more people in the country and their life expectancy has increase from 76.7 years to 77.9 years. This required the mining of 400 million more tons of resources than the estimated 6.6 billion tons provided in 1999 and nearly three times the amount of mineral and energy resources required to maintain the U.S. standard of living in 1950, MII said. Your comment?

James confident on market

At the BB&T Manufacturing and Materials Conference in New York City this week, Vulcan Materials Co. Chairman and CEO Don James spoke of his company’s plan to move forward despite the downturn of the residential housing market. In the face of the decline in housing starts, financing and real estate prices, Vulcan Materials is confident that the stability of public-infrastructure spending and the flow of federal highway dollars will be sufficient to sustain them. James said that in 2007, 81 percent of their aggregates demand was for the non-housing market, with only 19 percent going into housing (down from 20 percent in previous years.) Your comment?

PCA: cement useage to plunge

U.S. construction activity and cement consumption will experience significant declines this year, according to a recent Portland Cement Association Economic Research report. Portland cement consumption is expected to drop 10 percent in 2008, followed by an additional 3.6 percent in 2009. Total 2008 cement consumption is predicted to be 102.7 million metric tons.

"High fuel prices, acceleration of home foreclosures, and the impact of the sub-prime crisis on credit standards are some of the current conditions that lead us to believe the economy is already in a recession," Edward Sullivan, PCA chief economist said. "Even when there is recovery later this year, it will not immediately affect the construction and cement industries."

Sullivan anticipates high home inventory levels to depress the residential sector until second half of 2009, causing a 26.5 percent decline in housing starts for 2008. The nonresidential sector, which is closely tied to economic activity, will fall seven percent. "Nonresidential construction typically takes 18 months for recovery. This implies further declines in 2009, coupled with a slowdown in public construction activity during the same period," Sullivan said.

According to the PCA report, in the second half of 2009 the economy will gain strength as residential inventories are burned off and credit terms ease. This will lead to a 5.2 percent growth in cement consumption in 2010 followed by an even stronger gain in 2011. Your comment?

2007 production takes a hard dive

The year 2007 will go down as a forgetable one for the nation's aggregates producers. According to final numbers released by the U.S. Geological Survey, the estimated annual output of aggregates produced for consumption last year was 2.56 billion metric tons, a decrease of 16 percent compared with 2006.

Crushed stone production was 1.44 billion metric tons, a decrease of 16 percent, while construction sand and gravel production was 1.11 billion metric tons, also a decrease of 16 percent compared with 2006.

In 2007, spending on construction projects in the United States fell by a record 2.6 percent, the largest decrease since 2002. Private construction companies reduced their residential projects to levels not seen since 1993.

Portland cement consumption decreased by 9.5 percent in 2007 compared with 2006.

Aren't you glad its 2008? Your comment?

Quarterly forecast

FMI has released its latest quarterly economic forecast. Nonresidential construction will see declines in 2008 and 2009, except some publicly funded segments, according to the report. The nonresidential segments that are the most cyclical, or tied to the economy, will see declines in 2008 and 2009. These segments include office, commercial, religious and amusement and recreation. Lodging is the only exception as there is enough overhang from starts in 2007 that are still under construction in 2008.
 
Publicly funded nonresidential segments will fare much better, such as health care, educational, public safety and Homeland Security construction. Health care construction will remain positive partly due to facility upgrades across the country and seismic retrofits in California. Education construction will decline in some areas of the country due to less property taxes and therefore less state revenue. However, many MSAs and school systems in several states have passed education bonds, which will help to stop growth from turning negative.

Higher education will experience steady growth driven by an increase in endowments. Public safety construction will grow because of increasing inmate populations (which is rising faster than the general population growth) and an increase in fire and police stations. Homeland Security port and border work and port work to increase port size to be able to accept post-Panamax sized vessels will help to drive transportation construction. Increased airport delays will also increase construction. Your comment?

ConExpo-Con/Agg: Day Four

There is more evidence that has been a record-breaking show. During a conversation with AEM's Darrin Drollinger, I found out that ConExpo-Con/Agg 2008 and its affiliated shows have set records for attendance, exhibit space and number of exhibiting companies. When all is said and done, ConExpo-Con/Agg 2008 will go on record as the largest trade show in North America of any industry in 2008. More than 144,000 industry professionals from around the world will have attended the show. ConExpo-Con/Agg 2008 offered more than 2.28 million net sq. ft. of exhibits, taken by 2,182 exhibitors, which was 21 percent bigger than the last show, held in 2005. Your comment?

ConExpo-Con/Agg: Day Three

Another busy day at the show. The day started with a press tour of the Wirtgen booth, with its wide variety of construction equipment, including the Kleeman portable crusher. Press conferences from Bridgestone Firestone and Command Alkon offered a look at technology under development and product enhancements just hitting the marketplace. More emphasis on environmental issues were in evidence after some afternoon booth visits, including wheel-wash and dust-control technology being emphasized at the Nesco booth. There are rumors that attendence will cross the 140,000 threshold today. Your comment?

ConExpo-Con/Agg: Day Two

The second day of ConExpo-Con/Agg 2008 was just as busy as the first. Show officials announced that registrations were approaching 135,000, a new record. Of note today was the NSSGA Board of Directors meeting, where they announced a name change for their own trade show, set to debut in 2009 in Orlando. It will now be called AGG1. To continue the thread from yesterday, the association also announced its own sustainable development initiatives, and Jennifer Wilson gave her annual association update, which included her take on the current political climate.Your comment?

ConExpo-Con/Agg: Day One

The first day of ConExpo-Con/Agg 2008 featured corporate press conferences by Caterpillar and Komatsu. It is interesting to note that both companies made the issue of sustainable development part of their presentation. We are starting to see a distinct trend developing whereby corporations and organizations are making a decision that "green is good." At Pit & Quarry, we are going to be following this trend closely, with a special April issue on environmental topics and a new "green" page in subsequent issues. Your comment?

ConExpo-Con/Agg

I'll be blogging this week from the ConExpo-Con/Agg
show in Las Vegas. Check back during the week for reports on show activities, press conferences and other news and information. Your comment?

Materials costs go up again

Imported inflation for oil, steel and cement pushed contractors’ materials costs up 1.3 percent in January over December after nine months of small, offsetting, monthly price changes, according to Reed Construction Data. These inflation pressures were strong enough to overcome the continuing slide in materials demand in a weakening construction market.

Materials costs increased 4.1 percent from December 2006 to December 2007. Prices are forecast to increase less in the current year, probably about 2.5-3.0 percent, as the depressing impact of a strengthening U.S. dollar, still declining real construction spending and slower economic growth outside the U.S. takes hold later in the year. Construction materials price inflation will pick up slightly to 3-4 percent in 2009.

January’s significant price changes included a 1.9 percent rise in structural steel prices, a 3.2 percent jump in diesel-fuel prices, a 1.2 percent increase in the cost of aggregates and 0.5-1.0% increases for concrete products. Your comment?