Seaborn: Questions arise about key producer markets

Editor’s note: As part of our Road to Recovery coverage, P&Q is turning to some of the industry’s leaders for their takes on the road ahead. This month, leaders were posed with the following questions: What does your 2020 crushed stone, sand and gravel production look like to date? Have you seen upward or downward movement on aggregate pricing this year? And do you have an early sense of how production and pricing might fare next year?

Since the pandemic’s start, aggregate demand in the Mid-Atlantic and Southeast markets has been moderately weaker than the same period of 2019. Fortunately, several major multiyear infrastructure jobs have helped our business offset these declines, leading to flat year-over-year demand.

Prices for many building materials, such as lumber and liquid asphalt, have been volatile since the start of the pandemic, but aggregates pricing has been fairly stable, with slight increases throughout this period. Compared to other materials, the aggregates industry has been less impacted by supply chain disruptions caused by COVID, tariffs and unplanned demand.

In 2021, demand is expected to decline due to weakening nonresidential and public spending. The Fed announced a desire for increased inflation throughout the economy, which should continue to provide upward pressure on all material prices, including aggregates. During the last recession, aggregates pricing grew steadily despite a significant drop in demand, and we believe the same trend will emerge during this recession.

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Scott Seaborn is market research manager at Luck Companies.

Featured image: P&Q Staff