Demand for asphalt used in highways and streets is forecast to advance 3.3 percent per annum to 13.7 million tons in 2021, aided by increases in government funding and rising highway and street construction activity.
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.
These and other trends are presented in Paving Asphalt Market in the U.S., a new study from The Freedonia Group, a Cleveland-based industry research firm.
Recent legislation has created a favorable funding environment for highway maintenance. In addition, many 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 gal., 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; additionally, many 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.
Demand for paving asphalt products in all applications is forecast to advance 3.4 percent per annum to 21.9 million tons in 2021. Factors driving growth include the passage of the Fixing America’s Surface Transportation (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.