Increased demand from the housing market will boost industry revenue
Los Angeles, CA (PRWEB) March 17, 2013
The Sand and Gravel Mining industry principally mines and undertakes basic processing of sand and gravel used for construction aggregate and industrial applications, such as road building, landscaping, snow and ice control and petroleum extraction. The industry also undertakes the extraction and primary processing of clay and refractory products for use in downstream manufacturing applications. The volume of domestic production of sand and gravel is expected to amount to 927.4 million metric tons in 2013, declining at an average annual rate of 3.2% during the five years to 2013. This decline in production is largely due to the continued weakness of US construction markets. Revenue is expected to grow 6.4% in 2013 to total $11.1 billion, yet it remains far below the record revenue of $12.7 billion generated in 2006. “The slump in downstream construction markets from 2008 to 2009 hurt demand for construction aggregates and materials for building products,” says IBISWorld industry analyst Agiimaa Kruchkin. Consequently, weak demand resulted in a steep revenue drop of 19.5% in 2009, which followed a 10.4% fall in 2008.
Despite the recovery from 2011 to 2012, Sand and Gravel Mining industry revenue is expected to have dropped at an annualized rate of 0.4% in the five years to 2013. “The dramatic deterioration of housing construction since 2008 reduced demand for a range of building materials,” adds Kruchkin. “However, solid growth conditions in the infrastructure and nonresidential building markets partially buoyed the demand for construction materials in the latter part of the past five years.” Nonetheless, demand from these markets could not sufficiently offset the decline in the housing market and manufacturing industries.
The industry has a low level of concentration; most of the industry is made up of smaller firms, as it is difficult to acquire the vast amounts of capital required to set up a network of facilities serving multiple geographic markets necessary to capture a large market share. The leading players, including major companies CRH PLC, HeidelbergCement AG and Martin Marietta Materials, operate multiple establishments across geographic markets. There has been a notable trend toward increased concentration of ownership in the past decade, with several medium- to large-scale players acquiring the operations of competitors to establish or strengthen their position in regional markets. This consolidation has occurred during periods of relative industry growth, and has been largely confined to mergers and acquisitions rather than industry exits.
In the five years to 2018, the demand for clay and refractory materials is projected to continue deteriorating in several downstream manufacturing industries. This decline will be offset by stronger demand in the downstream housing construction market in the latter part of the five-year period, strong growth in public sector investment into highway and bridge construction market and the expected increase in private spending on home improvements as the US economy strengthens. For more information, visit IBISWorld’s Sand and Gravel Mining in the US industry report page.
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IBISWorld industry Report Key Topics
This industry comprises firms involved in mining and quarrying sand (construction and industrial) and gravel, along with clays, and ceramic and refractory minerals. Industry activity may include the beneficiation of these minerals by washing, screening and otherwise preparing the mined sand, gravel and clays.
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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