Aggregate producers had high expectations entering 2024.
Key demand fundamentals, of course, were in place at this time last year – particularly for infrastructure like roads, bridges and highways.
Demand for infrastructure remains high as a new year nears, but producers now see the dynamics that typically drive nonresidential and residential construction shaping further into their favor. As such, producers are not only bullish about 2025, but they see opportunity extending into 2026 and beyond.
Might the industry be venturing into a golden age for aggregates? Time will ultimately tell. Regardless, producers see plenty of runway ahead for growth.
“We are seeing continued opportunities to bid on projects across our footprint, with record or near-record budgets at most of our state departments of transportation,” says Brian Gray, president and CEO of Knife River Corp. “We have a good schedule of DOT (department of transportation) bid lettings coming up for 2025 across our states. Our backlog of $755 million is higher than the same period last year, with slightly higher expected margins.”
Other views
Ward Nye, chairman and CEO at Martin Marietta, agrees infrastructure spending is at record highs. Those spending levels are one reason to be optimistic about 2025, but Nye likes what’s transpiring in other construction markets, too.
“Looking ahead to 2025 and beyond, we expect to benefit from record levels of federal and state investments in highways, streets and bridges,” says Nye, commenting Oct. 30 as Martin Marietta reported its third-quarter results. “Additionally, reshoring and the buildout of artificial intelligence infrastructure should provide steady growth in these aggregates-intensive end markets for years to come.
“Further, although higher interest rates continue to affect residential construction activity, we are encouraged by recent Federal Reserve policy actions and the likelihood of more interest rate cuts later this year, which should support a recovery in housing and, subsequently, light nonresidential construction activity.”
Cody Ladd, president and COO at Kraemer Mining & Materials, is similarly excited about nonresidential construction’s prospects for the coming years.
“If you look at semiconductor growth and the level of infrastructure needed for electric vehicles and the popularity of them, we’re on the right side of all that as an industry,” Ladd says.
The same goes for the producers present in markets where data centers are going up.
“[In] any key market, you’re hopefully dealing with a data center,” Ladd says. “And, hopefully, you’re in a state that’s creating tax benefits for a data center.”
Tom Hill, chairman and CEO at Vulcan Materials, also has a positive view of construction’s various markets right now.
“A demand backdrop underpinned by growth in public construction activity and an improving private demand environment should lead to volume growth in 2025,” Hill says. “Our steadfast focus to execute at the highest level – both commercially and operationally – positions us well to capitalize on improving volume and grow earnings.”
Aggregate pricing has steadily improved over the last couple of years, as well. Hill expects to see additional pricing growth next year.
“As we look to 2025, we expect aggregates price to improve high-single digits, costs to benefit from our Vulcan way of operating disciplines and moderating inflation, and, most importantly, cash gross profit per ton to continue expanding at double-digit levels,” he says.
As Ladd describes, additional pricing growth in 2025 will be critical for the industry moving forward.
“We have a lot of pricing momentum, and I think we need that in our industry,” Ladd says. “We’re one of the few things you can buy a ton of for – [and] usually [at] less than $20, let’s say. We’d like to see that move up.”
Ladd’s greatest concern for 2025 resides in this pricing area, though.
“My biggest fear is that we lose infrastructure momentum due to folks thinking we’re in an aggregates bubble when, the reality is, we just have a commodity that’s wildly underpriced. Hopefully, we can get that up over time.”
« Prev Page 1 2 Next Page »