Industry revenue will benefit from recovering downstream construction markets.
New York, NY (PRWEB) June 29, 2014
The Asphalt Manufacturing industry has experienced volatile demand over the past five years. The US housing crisis dragged down the domestic housing market, causing domestic residential construction to fall. “The industrial sector also took a hit during the recession, causing nonresidential construction investments to contract substantially,” according to IBISWorld Industry Analyst David Yang. As a result, industry revenue decreased as much as 7.6% in 2010. Since then, the industry has continued to experience considerable revenue volatility, brought on by concerns of a housing bubble in Canada. Overall, however, revenue has increased due to strong government investments in road and highway construction. In the five years to 2014, IBISWorld expects industry revenue to increase at an average annual rate of 0.5% to $4.1 billion.
Government infrastructure funding was critical for industry growth. The Building Canada Fund, Infrastructure Stimulus Fund and Canada Strategic Infrastructure Fund provided a combined $17.1 billion for infrastructure projects, which greatly bolstered road and highway construction activity. “As a result, demand for asphalt concrete, blocks and paving products increased, translating into revenue growth for industry operators,” says Yang. However, government funded projects were mostly short-term stimulus initiatives. In 2014, government funding is expected to rise at a sluggish 0.7% rate. Stagnant funding growth, combined with housing bubble concerns, are anticipated to cause revenue to fall 0.9% in 2014.
Industry profitability also slightly contracted over the past five years. Profit was high in 2009 due to a sharp drop in crude oil prices. Since then, industry operators have faced higher raw material costs as crude oil prices recovered from their recessionary low.
Over the next five years, the industry is projected to grow as downstream demand picks up. Residential construction expenditure is expected to grow over the period. Housing construction and renovation spending will gradually expand, fuelling demand for asphalt shingles and roofing products. Industry operators will also benefit from the recovering US economy, which will boost asphalt roofing product exports to the United States.
For more information, visit IBISWorld’s Asphalt Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures paving and roofing materials, including asphalt and tar-paving mixtures, blocks, roofing cements, coatings and shingles produced from purchased asphaltic materials and coal tar. This industry excludes asphalt paving products directly produced from petroleum refineries.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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