1. Development status
of the aggregate industry in the United States Whether in China or in the United States, aggregate plays an indispensable role in the construction industry, and the history of the standardized development of the aggregate industry in the United States is longer than that in China, and there are many reference parts in the development process of the industry.
In today's U.S. market, where aggregates are used in almost all types of public and private construction, replacement products for quality aggregates are extremely limited. Like China, the aggregate industry in the United States is also a highly decentralized industry with fragmented distribution. According to the data of 2021, the sand and gravel industry in the United States is composed of more than 5500 companies, with nearly 1. Under the fragmented distribution, the superimposed mining procedures are complicated. At present, companies in the industry usually enter new markets and expand their market share through acquisitions.
1. At the beginning of the 20th century, the production of sand and gravel for construction in the United States was small and its use was limited. Today, the annual production of sand and gravel is among the highest in the non-fuel mineral industry and is an integral part of the construction industry.
Generally speaking, sand and gravel in the United States are basically self-sufficient, and the demand for sand and gravel for construction mainly depends on the level of construction activity, which is closely related to infrastructure construction and real estate investment. Public sector construction activity has historically been more stable than privately invested construction and tends to receive more stable funding throughout the economic cycle.
Figure 1-1: US private sector construction activity is
volatile Source: Cement Big Data (https://data.ccement.1982 The economic downturn in 2008 can be reflected in the low production of sand and gravel for construction. In addition, the 2007-2008 economic crisis also had a greater impact on the private sector, resulting in a sharp decline in the overall demand for sand and gravel aggregates for construction. From this, we can see that the aggregate industry has a significant periodicity.
Generally speaking, the demand for sand and gravel aggregates is closely related to the economic situation in the United States and has cyclical characteristics. However, in terms of price, the price of aggregates in the United States has generally shown an upward trend in the past 40 years, and even in the downturn stage of the economy, it often rises against the trend.
1. Gravel mining sites in the United States basically match urban agglomerations and population distribution, showing a highly decentralized distribution, close to end customers, which can be seen from the business layout of two major sand and gravel suppliers, Vulcan Materials and Martin Marietta Materials.
This decentralization has also led to a large number of small, privately held companies in the aggregates industry. According to the annual report of Vulcan Materials, the top ten aggregate producers account for 33% of the total aggregate production in the United States in 2021, and Vulcan Materials, as the industry leader, has less than 10% of the total market share in the United States (excluding the acquisition of American Concrete Company).
Figure 1-2: Stable
concentration of aggregate head enterprises in 2017-2021 Data source: Cement Big Data (https://data.ccement.
II. Market operation analysis of
the US sand and gravel industry 2.1 Demand analysis
According to the data of the US Geological Survey, the total demand for sand and gravel in the United States will reach 2.6 billion tons in 2021. Year-on-year growth 4.
Figure 2-1: Rising
demand for sand and gravel aggregates in the United States in 2021 Data source: Cement Big Data (https://data.ccement.com/), the United States Geological Survey
, from the perspective of product structure. In 2021, sand and gravel accounted for 38.5% of the demand for sand and gravel in the United States, and gravel accounted for 61. In recent years, the proportion of gravel demand in the total demand for sand and gravel in the United States has generally increased.
Figure 2-2: Gravel demand as a percentage
of aggregate demand in the United States, 2001-2021 Source: Cement Big Data (https://data.ccement.com/), U.S. Geological
Survey 2.1.1 Sand and Gravel
In 2021, the production of construction sand and gravel (natural sand and gravel) in the United States was about 1 billion tons, an increase over the previous year. 6. Due to the growth of private and public construction markets, the consumption of construction sand and gravel increased in 2021.
Figure 2-3: Construction Sand and Gravel Production and Growth Rate
in 2021 Source: Cement Big Data (https://data.ccement. In these 50 States, California, Texas, Arizona, Minnesota, Utah, Michigan, Washington, Ohio, Colorado, and New York together account for about 53% of total production.
In terms of use, the USGS estimates that about 46% of construction sand and gravel is used as Portland cement concrete aggregate, 21% as roadbase, overburden and road stabilization, 13% as construction backfill, and 12% as asphalt concrete aggregate and other asphalt mixtures. 8% is used for other purposes (concrete products, filtration, golf course maintenance, gypsum and shotcrete, railway ballast, road stabilization, roof particles and snow and ice control, etc.).
Figure 2-4: Distribution of
sand and gravel uses in the United States in 2021 Source: Cement Big Data ( https://data.ccement. is different from other countries that mine offshore aggregates for onshore construction projects. The use of offshore sediments in the United States is primarily limited to beach erosion control and replenishment. 2.
1.2 Crushed stone
In 2021, the United States produced about 1.5 billion tons of crushed stone, up from 1.47 billion tons in 2020.
Figure 2-5: Crushed stone production
in 2021 Data source: Cement Big Data (https://data.ccement.
From the perspective of use, according to the estimation of the United States Geological Survey. About 72% of the crushed stone is used as building aggregate, mainly for road construction and maintenance, about 16% for cement manufacturing, 8% for lime manufacturing, 2% for agriculture, and the remaining 2% for other uses such as chemistry.
Figure 2-6: Distribution
of Gravel Uses in the United States in 2021 Data Source: Cement Big Data ( https://data.ccement.2.
From the perspective of exports, The export volume of sand, gravel and gravel is about one million tons all the year round, with little fluctuation. From the import point of view, the proportion of sand and gravel imports is very small, and the proportion of sand and gravel imports in the apparent consumption of sand and gravel is less than 1%. In 2021, the imports of sand, gravel and gravel will be reduced by 20% and 10% respectively.
Figure 2-7: Decrease
in US sand and gravel imports in 2021 Source: Cement Big Data (https://data.ccement.com/)
2.3 Price Analysis
The price of sand and gravel aggregate in the United States is generally on the rise, with sand, gravel and gravel rising by 105.82% and 141% respectively since 2000. In 2021, the average price of sand and gravel in the United States is $9.9/ton, an increase of 3.34% over the same period last year, and the price of gravel is $13/ton. Year-on-year growth 6.
Figure 2-8: Aggregate prices in the United States generally show an upward trend
Data source: Cement Big Data (https://data.ccement. According to the annual report of Vulcan Materials, the industry CR10 (calculated by sales volume) was 33% in 2019. In 2020, it dropped to 31%, and in 2021, it rose to 33%. In the past five years, CR10 in the industry has been relatively stable, and it has been above 30% for a long time. Crushed rock CR10 (by production) is 47% and sand and gravel CR10 (by production) is 48%,
according to the relevant yearbook published by the US Geological Survey (latest 2017).
Table 3-1: Ranking
of Top Ten Aggregate Suppliers in the United States Source: Cement Big Data ( https://data.ccement.3.
According to the annual report of the company in 2021, The Company achieved revenue of US $5.552 billion for the year, representing a year-on-year increase of 14.32%, and realized net profit attributable to the Company of US $670.8 million, representing a year-on-year increase of 14. Vulcan Materials divided its business into four segments, namely aggregate, asphalt, concrete and calcium. Aggregate is the company's main business. In 2021, the company's aggregate revenue was $4.345 billion, up 10% year-on-year, accounting for 78% of the company's total revenue.In 2021, the aggregate delivered by the company reached 222.9 million tons, with a year-on-year growth of 7%, and the gross profit per ton reached 5. It is worth mentioning that in recent years, the proportion of the company's supply to the public sector has shown a downward trend. In 2011, the proportion of the company's supply to public investment projects reached 55%, and by 2021, the proportion has dropped to 42%.
As the largest aggregate supplier in the United States, Vulcan Material has its unique position in the industry. According to the company's financial report, in the fourth quarter of 2021, the company's revenue accounted for 28.66% of the total of the top ten building materials manufacturers in the United States. As of December 31, 2021, the company's business has covered 22 States in the United States, with 404 aggregate plants, 69 asphalt plants, 173 concrete plants and 1 calcium plant, with a total aggregate reserve of 15.6 billion tons.
Figure 3-1: Distribution
of Vulcan Aggregate Plants Source: Cement Big Data ( https://data.ccement.) According to the Moody's Analysis (Moody's Analytics) report, in 2020-2030, Seventy-five percent of population growth, 72% of household growth, and 70% of job growth in the United States will occur in States covered by Vulcan materials. Therefore, although barriers to entry such as high transportation costs limit the pace of the company's expansion, from the demand side, the company has a strong long-term growth.
Figure 3-2: Population, Employment and Family Conditions
of States Covered by Vulcan Material Business Data Source: Cement Big Data ( https://data.ccement.com/ ), Annual report
of the company 3. As of December 31, 2021, the company's business has covered 28 States in the United States, with 350 aggregate plants.
Figure 3-3: Martin Marietta Materials quarry and underground mine
locations Source: Cement Big Data ( https://data.ccement.com/ ),
According to the company's annual report in 2021, the company achieved revenue of 5.414 billion US dollars, an increase of 13.88% over the previous year, and realized net profit of 702.5 million US dollars, a decrease of 2.12 million US dollars over the previous year. In 2021, the company delivered 201.2 million tons of aggregate, with an average price of 15.08 US dollars per ton of aggregate. Year-on-year growth 2. In 2021, 34% of the company's organic aggregate shipments were contributed by contractors related to highway and other public infrastructure projects, while the rest were mainly sold to contractors for non-residential and residential construction projects.
Based on the current production level, the total aggregate reserve of the company is about 78 years. Environmental and zoning regulations in the United States have made it increasingly difficult for the aggregates industry to expand existing quarries and develop new quarry operations, so the company has also actively participated in industry consolidation, believing that future growth may depend in part on the acquisition of other businesses in the industry. As stated in the company's financial report, selective acquisitions and joint ventures will be the company's continuing strategy. Acquisitions enable the Company to expand its customer base by increasing rail transportation, with the current Company's rail network primarily serving the Texas, Florida, Colorado, and Gulf Coast markets.
4. Prospects for
development trends in 2022 4.
The downstream sand and gravel industry in the United States is mainly the construction industry, and the long-term growth of total construction demand is affected by public and private construction sector activities and construction work related to infrastructure improvements across the country. Therefore, the business of sand and gravel enterprises largely depends on the prosperity of the construction market and economy in the United States. In 2022, both the public and private construction sectors in the United States have shown strong vitality, which has become a potential factor supporting the demand and price rise of sand and gravel aggregates.
Figure 4-1: US GDP Growth Rises
private construction sector, the number of new housing starts in the United States rebounded sharply in the first quarter of 2022. According to data released by the U.S. Census Bureau, the number of private housing starts in February was a seasonally adjusted 1.77 million units, up 6.8% from the previous month and 22.3% from the same period last year, the fastest growth rate since 2006. The number of single-family housing starts reached 1.215 million units, up 5.7%; Single-family completions rose 12.1% to 1.034 million units, while multifamily housing starts, such as apartment buildings and condominiums, increased to 55.
Over the past decade, both inventory and vacancy rates in the United States have fallen sharply. According to data released by the National Association of Realtors (NAR) in February, the inventory of unsold homes in the United States fell to a record low of 860000 units, equivalent to only 1.Historically, U.S. housing inventories generally bottom out in December and rebound in the spring buying season, and according to Zillow's monthly report, inventories in February 2022 fell by 11. In addition, although mortgage rates have risen in the past two years, they are still low relative to history.
Figure 4-2: US mortgage rates are still low
relative to history Source: Cement Big Data (https://data.ccement.2022) The total number of new housing starts in the United States rose to 1.79 million in March, the highest level since 2006. With a total of 1.87 million building permits, future construction activity is expected to be strong, while the annual rate of single-family housing starts is 1.2 million, down slightly but still well above pre-epidemic levels. Multifamily housing starts, which include apartment buildings and condominiums, increased to 59 in March. In April, U.S. builder confidence fell to a seven-month low, still above pre-pandemic levels. Overall, the U.S. public and private construction sectors are more active in 2022, and sand and gravel aggregate demand and prices are expected to be boosted.
4.
In 2021, the top ten aggregate producers accounted for 33% of the total aggregate production in the United States. As mentioned above, from the perspective of the top two enterprises, acquisition is an important part of the enterprise development strategy, and the concentration of the sand and gravel industry in the United States will be further enhanced.
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