Aggregates Manager Digital Magazine
Issue link: http://read.dmtmag.com/i/619545
by Therese Dunphy | Editor-in-Chief | tdunphy@randallreilly.com FORECAST 2016 14 AGGREGATES MANAGER / January 2016 Y ear-over-year growth seems to be the overall sen- timent of respondents to the Aggregates Manager 2015-2016 Forecast Survey. The survey assesses pro- duction trends for the current year and asks producers their expectations for the coming year. For the first time since 2006, the percentage of producers reporting an excellent year during 2015 hit double digits, with 12 percent opting for the highest rating for business conditions. At the other end of the spectrum, just 3.7 percent of producers categorized 2015 as a poor year. That number is the lowest reported for poor ratings during the forecast's 12-year history. Looking ahead, operators are also optimistic about business conditions for this year, with 42.5 percent anticipating an excellent or very good year, and an additional 41.7 percent expecting a good year. Given the positive ratings reported in our monthly Ag- gregates Industry Outlook (AIO), the upbeat results are not a surprise. Since its debut in July, AIO ratings have averaged more than 128 on a scale where 100 is the neutral point. In addition, U.S. Geological Survey reports for the first half of 2015 indicate a 6-percent increase in crushed stone production, and a 4-percent increase in sand and gravel production. 2015 ratings by category Looking at the results based on size, material type, and region, smaller producers were the most likely to report more nega- tive business ratings. Nearly 18 percent of producers of less than 500,000 tons per year described 2015 as fair, with an additional 7.7 percent calling it a poor year. The numbers were even higher for producers of 500,001 to 1 million tons per year. Nearly 32 percent of these producers opted for the fair rating, and 5.3 percent more selected the poor rating. Interestingly, sand and gravel producers were the most likely to report positive business results. Almost 42 percent called 2015 an excellent year, while another third described it as very good. Producers of both crushed stone and sand and gravel were the next most positive group. Approximately 12 percent described 2015 as excellent and an additional near- ly 24 percent described it as very good. None of the crushed stone only respondents described 2015 as excellent, but 25 percent did describe it as very good, while an additional 55 percent described it as good. By region, producers in the South apparently had a good year during 2015. More than 46 percent of them described 2015 as either excellent or very good. They were followed the North Central region, where 29.6 percent of producers chose the top two rating categories. Just over 27 percent of producers in the Northeast and West noted excellent or very good business conditions. Producers in the North Central region were the most likely to report lower business conditions, with 22.2 percent describing them as fair and an additional 7.4 percent describ- ing them as poor. They were followed by the West where 20.8 percent described business conditions as fair, and 3.4 percent said they were poor. Expectations for 2016 When asked about business conditions this year, 11.1 percent (-0.9 percent) expect an excellent year, 31.4 percent (+8.2 percent) anticipate a very good year, 41.7 percent (-3.7 percent) predict a good year, 13.9 percent (-1.8 percent) forecast a fair year, and 1.9 percent (-1.8 percent) call for a poor year. Large producers are the most optimistic about 2016. Half of those with annual production rates of 3,000,001 to 5 million tons expect either an excellent year (10 percent) or a very good year (40 percent). Producers with annual tonnages of more than 5 million tons were also upbeat; 17.6 percent anticipate an excellent year, while an additional 29.4 percent predict a very good year. Conversely, small producers were the least optimis- Keep on Rocking in the Real World Optimism reigns overall, but pockets of low demand persist as the industry rebound continues.