Aggregates Production: What Went Wrong?

March 6, 2023 – At the start of 2022, it was highly anticipated that aggregates production would rise to about 2.80 billion metric tons (Gt) for the year. Well, final numbers are in and the estimated annual output of construction aggregates produced for consumption in 2022 was 2.44 Gt, unchanged from that of 2021, according to Jason Christopher Willett, commodity specialist at the U.S. Geological Survey. For the fourth quarter of 2022, an estimated 575 million metric tons of total construction aggregates was produced and shipped for consumption, a decrease of 7% compared with that of the same period of 2021. So what went wrong? A quick look at the fourth quarter reports of some of the major publicly traded aggregates producers sheds some light on that. A crippling fourth quarter essentially doomed full-year aggregates production numbers. Vulcan Materials reported that aggregates segment gross profit increased in the fourth quarter despite lower shipments due mostly to unfavorable weather. Fourth quarter gross profit increased to $327 million, or $6.04 per ton; shipments declined 6%. Martin Marietta Materials reported that fourth-quarter aggregates shipments decreased 12.0%, largely due to inclement weather in a number of key markets compared to the unseasonably warm and dry prior-year period that extended 2021 construction activity. Summit Materials reported that organic aggregates sales volumes declined 12.0% driven by a combination of unfavorable weather conditions, supply chain related disruptions,and moderating residential demand. Heidelberg Materials, in its latest quarterly report, noted that North American revenue was up 17.6% for the quarter and 7.8% for 2022, although aggregates sales volume was off 5.7% for the quarter and 5.0% for the year. And that pretty much tells the tale.

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