Aggregates Industry Outlook continues to decline in October

Therese Dunphy

October 13, 2017

Aggregates Industry Outlook

Aggregates Industry Outlook Index

The October Aggregates Industry Index dipped slightly to an overall score of 128.38, a 0.76-percent decrease from September. Respondents reported mixed opinions on the impact of recent hurricanes on the both production and demand with some noting the short-term decrease in demand while others anticipate the gains of a long-term recovery. Minimal changes were reported for most business sentiment indicators, including industry and company outlooks as well as sales for the quarter and half. Monthly sales experienced a slightly more significant decrease with a 7.5-percent decline, compared to September. More optimistic results were reported for annual sales, with a 7.3-percent increase over September results.

Comments:

Sand and gravel reserves are depleted in the Denver metro area. All demand is being pushed on the crushed stone operation. Rail (is) soon to enter the market.

— Al Frei, Jr., President, Albert Frei and Sons

In our state of Mississippi, our road funding is down almost 30-35 percent. The budget is still shrinking and our lawmakers turn a blind eye to our road system’s decay.

— Tim C. Rakestraw, Area Aggregates Manager, APAC, Inc., an Oldcastle Company

Houston, along with the Gulf Coast Region, is still in recovery mode from Hurricane Harvey. I think it will another three to six months before we can get an accurate read on the direction of the market.

— Rob Van Til, Managing Partner, River Aggregates, LLC

Despite early year impacts due to weather, 2017 is shaping up to be as good as 2016. Anticipation is high that the economy will maintain its course in 2018.

— Daryl Zeiner, Sales Manager, The H&K Group

Given the aftermath of two destructive hurricanes and their relative impact on the Southern United States, I see a spike in aggregate demand and production. Coupled with available funding, I believe produces are in a position to increase inventory that will remain very liquid.

— Jill Shackelford, President, Jill Shackelford ConsultingExploration Services.

In the Southeast, exploration related to potential greenfield sites, along with quarry expansions, is brisk. This being the case, 2017 continues as one of our busiest in the last 40 years.

— O.F. “Russ” Patterson, III, Chief Geologist, Patterson Exploration Services.

Things are very positive in our area with an uptick in greenfield exploration and movement of stone. The tragic hurricanes in Florida and Texas are leading to more rail shipments into those areas as recovery continues. The lack of any significant movement on infrastructure repair and improvement by the Trump Administration is disappointing.

— Bob Fousek, President, FMR

Recent hurricanes in Florida, Gulf, and Texas have cut production needs and reduced operating hours.

— Jason Hurdis, Senior Market Professional, Caterpillar

Industry outlook for the next year
October responses for the overall industry outlook dropped 1.9 percent from September expectations. They remain 18.6 percent higher than the October 2016 reports.
Company outlook for the next year
In terms of expectations for their own companies, respondents were restrained. In October, they reported a 1.9-percent decrease in expectations, compared to September. This month’s results are still 10 percent higher than those reported in October 2016.
Outlook for monthly sales
Following inclement weather, reports for monthly sales experienced the greatest month-to-month decline with a 7.5-percent decrease from September. However, October 2017 monthly sales results are 10 percent of those from a year prior.
Outlook for quarterly sales
Anticipated sales for the next quarter are down 1.3 percent from September ratings, but are 18.2 percent higher than October 2016 expectations.
Outlook for sales for the next half
Respondents were more pessimistic about sales for the next six months than any other time frame. Expectations for sales during the next six months were down slightly — 1.3 percent — from September. They were, however, 15.6 percent higher than those reported during the same month a year prior.
Outlook for annual sales
Looking forward from an annual sales perspective, respondents gave their most optimistic monthly ratings. October results were up 7.3 percent over the month prior and 12.3 percent over a year prior.
Editor’s note: To join our panel, email Editor-in-Chief Therese Dunphy at tdunphy@randallreilly.com.

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