Study: Expect more demand for paving asphalt

Demand for paving asphalt is expected to rise in the coming years.

Demand for paving asphalt used in highways and streets is forecast to increase 3.3 percent per year to 13.7 million tons in 2021, according to a new study from The Freedonia Group.

A jump in government funding and rising highway and street construction activity are expected to aid the increase, according to the study, titled “Paving Asphalt Market in the US.” Demand for paving asphalt products in these applications is primarily driven by government funding for highway and street construction, which accounts for 97 percent of nonbuilding paving asphalt demand.

Also according to the study, legislation has created a favorable funding environment for highway maintenance. A number of states are considering legislation to increase fuel excise taxes, which help fund highway projects.

In April 2017, California, the nation’s most intensive user of paving asphalt products, approved a tax increase of 12 cents per gallon, which is expected to raise more than $5 billion every year for highway projects. More favorable economic conditions will boost overall tax revenues used to fund paving projects, The Freedonia Group adds.

Additionally, a number of legislative bodies will approve direct funding mechanisms – such as grants or bond issues – to allocate additional capital for such projects as road construction and highway repair and rehabilitation, The Freedonia Group reports.

Demand for paving asphalt products in all applications is forecast to advance 3.4 percent per year to 21.9 million tons in 2021. Factors driving growth include the passage of the FAST Act; efforts by state governments to increase infrastructure budgets and fuel taxes; rising highway, street and other nonbuilding construction activity; and strong gains in nonresidential improvement and repair activity.