Aggregates market at lowest level since 1960s

Further reductions in third-quarter mineral product sales confirm steep decline in construction activity

NEW data from the Mineral Products Association (MPA) indicates that construction activity remains significantly lower than in 2011. MPA survey results for the third quarter of 2012 reveal that sales volumes of crushed rock and sand and gravel aggregates were 4% and 11% down, respectively, on the third quarter of 2011, while ready-mixed concrete was down 9% and asphalt was down 20%.

For the first nine months of 2012 all products show significant declines over 2011, with crushed rock, sand and gravel, ready-mixed concrete and asphalt all down by 9%, 12%, 11% and 18% respectively.

Following modest improvement in industry markets in 2011, the scale of reduction in industry demand in 2012 means that aggregates, concrete and asphalt demand this year will be lower than the previous depths of the recession in 2009.

The decline in aggregates and related markets this year is mirrored by the official ONS construction output figures, indicating that in the first eight months of 2012 (the latest detailed data) total construction output was 8% down on the same period of 2011 and new construction work was 12% down.

The figures highlight the unexpectedly steep fall in construction output which was the main contributor to the poor performance of the economy in the first three quarters. Today’s GDP figures show that provisional construction output in the third quarter was 2.5% lower than quarter two and 11% lower than quarter three of 2011, and that the construction industry remains deep in recession.

Nigel Jackson (pictured), chief executive the MPA, commented: ‘The MPA figures are hugely disappointing and provide further evidence of the extent to which demand for mineral products and construction has fallen away. Of particular concern is the collapse in infrastructure work.

‘On 29 November last year, when delivering the 2011 Autumn Statement, the Chancellor made a number of transport announcements and concluded ‘this all amounts to a huge commitment to overhauling the physical transport infrastructure of our nation’. Since then infrastructure construction has fallen by 18%, road construction in the first half of 2012 was 44% and 36% lower than the first and second halves of 2011, and asphalt demand has fallen away by 18%.’

Mr Jackson continued: ‘The Department for Transport announced a welcome package of smaller national road improvements earlier this month, but government needs to go much further as it will take time for potential new private finance mechanisms to have a real impact on public infrastructure work.

‘The MPA has proposed that government funds a programme of local transport improvements and road maintenance work which can be implemented over the next 12 months. Unless urgent action is taken infrastructure construction will continue to move in precisely the opposite direction to the transport vision set out by the Chancellor last year.

‘It is vital that we move on from initiatives to urgent delivery if the gloomy prospects for the remainder of 2012 and 2013 are to be reversed. MPA members are currently focused on surviving the lowest market levels since the 1960s. We are all looking and waiting for some certainty and confidence so that much-needed public and private sector investment takes place.’

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