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Encouraging signs in US aggregates demand

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World Cement,

There are positive signs of demand recovery in the US aggregate industry, according to the boss of the largest producer of construction aggregates in the US, despite a slight fall in aggregates shipments in 2Q17.

“I am encouraged by what I see happening behind the reported numbers,” said Tom Hill, Chairman and CEO of Alabama-based Vulcan Materials Co.

According to Hill, private demand in the markets served by Vulcan continued to strengthen through the quarter, while high project starts accelerated, signalling an “end to the softness in starts that we have working through for the last year.”

“Our shipment backlog for public highway work haven’t been this high in at least three years,” Hill added.

Meanwhile, the key states of California and Virginia have also returned to shipment growth, with California recording 10% shipment growth, driven by private construction activity and a catch-up on work deferred from the wet 1Q17.

Taken together, Hill forecast a 5 – 10% increase in shipments from August through to the end of the year. “These results are a good indication of the market’s visibility to further demand recovery,” Hill concluded.

Hill’s positive tone comes after Vulcan’s 2Q17 shipments fell on prolonged and extreme wet weather in the southeast USA during May and June, as well as an absence of large project work in Illinois and coastal Texas.

Aggregates shipments totalled 47.97 million t in the quarter, compared to 48.77 million in the same period last year. Shipments for the first half of the year were down at 86.21 million t, compared to 87.97 million t in 2016. Despite this, Vulcan’s aggregates business reported record second gross profit, as pricing improved 5%.

“Aggregates unit gross profit was a second quarter record, despite the wet weather we experienced in some of our strongest markets,” said Hill. “We remain confident in the sustained multi-year recovery in materials demand across our markets, and in the further compounding improvement to our unit profitability.”

According to Hill, Vulcan now anticipates aggregates shipments of 182 – 187 million t for the full year with adjusted earnings of US$1.05 – US$1.13 billion.

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Aggregates news Construction news