Asphalt Manufacturing in the U.S.

Published by: SBI

Published: Feb. 1, 2009 - 205 Pages

Table of Contents

Chapter 1: Executive Summary

Scope of the Report

Market Data Provided

Methodology

A Note on Measures Used

Asphalt Production

Asphalt Consumption

Asphalt Applications

Asphalt Supply

Asphalt Demand

Asphalt Economics

Asphalt Distribution and Seasonality

The U.S. Liquid Asphalt Cement Market

U.S. Market Nears $12 Billion

Table 1-1: U.S. Liquid Asphalt Cement Value of Apparent Consumption and Year-over-Year Percentage Change, 1999-2008 (in millions of dollars)

2008 Production Drops 14%

Table 1-2: U.S. Liquid Asphalt Cement Apparent Consumption by Volume, Average Price per Barrel, and Year-over-Year Percentage Changes, 1999-2008 (in millions of barrels)

Liquid Asphalt Cement Market Forecast

Crude Costs to Remain Below 2008 Levels

Obama Administration Likely to Spend on Infrastructure

Coker Unit Investments Slow

2009 Production Increases Modest, Price Drops Significant

Table 1-3: U.S. Liquid Asphalt Cement Value of Apparent Consumption Forecast and Year-over-Year Percentage Change, 2008-2013 (in millions of dollars)

Consumption Growth at 8%, Prices Fluctuate

Table 1-4: U.S. Liquid Asphalt Cement Apparent Consumption by Volume, Average Price per Barrel Forecasts, and Year-over-Year Percentage Changes, 2008-2013 (in millions of barrels)

The U.S. Asphalt Products Market

Asphalt Products Market Reaches $24 Billion

Table 1-5: U.S. Asphalt Products’ Value of Apparent Consumption and Yearover- Year Percentage Change, 1999-2008 (in millions of dollars)

Total Quantities on the Decline

Prices on the Move Upward

Table 1-6: U.S. Asphalt Products’ Apparent Consumption by Quantity, Average Price per Metric Ton, and Year-over-Year Percentage Changes, 1999-2008 (in thousand metric tons)

Asphalt Products Market to Top $38 billion by 2013

Paving Mixtures CAGR 14% by 2013

Table 1-7: U.S. Asphalt Products’ Market Forecast by Segment and Yearover- Year Percentage Changes: Asphalt Paving Mixtures and Shingle and Coating Materials, 2008-2013 (in millions of dollars)

Competitive Overview: Refiner Focus

Fragmented and Regional Business Landscape

Marathon Is Largest Refiner with 12% Share of Production Capacity

Low Refiner Capacity Utilization

Producers/Pavers Highly Fragmented

Economic & Marketplace Trends

Real GDP Growth Projected at Negative 0.8% for 2009

Figure 1-1: Percentage Changes in U.S. Current-Dollar GDP, Real GDP and the GDP Price Index, 2002-2008 (percentage)

Asphalt Product Producer Prices Skyrocket

Price Increases by Product

Paving Products: Mixtures See 17% Gain in 2008

Roofing Products See Relatively Modest Price Increases in 2008

Asphalt Input Prices: Crude Up 75%+

Coker Projects May Further Reduce Asphalt Supply

Pavement Input Prices: Liquid Asphalt and Aggregate Up Overall 7%

Other Asphalt Pavement Input Costs

Higher Prices on Input Materials for Concrete

Prices and Supply Jeopardizing Road Maintenance Budgets

Warming Weather Trends Benefit Marketplace

Re-Defining as a Green Industry

Labor Shortages and Immigration to Hamper Road Building

Warm Mix Asphalt Positioned to Usurp Hot Mix

End User Markets

Paving Industry Consumes 93% Asphalt Plus

Asphalt Roofing No Growth in Sight

Total Construction Spending Declines

Table 1-8: Total U.S. Construction Spending and Year-over-Year Percent Change, 2002-2008 (in millions of dollars)

Highway & Street Construction Down from Mid-Decade

Table 1-9: Total Highway & Street Construction Spending and Year-over- Year Percent Change, 2002-2008 (in billions of dollars)

State & Local Pavement Spending at $50 Billion for 2008

Table 1-10: Total State & Local Pavement Spending and Year-over-Year Percent Change, 2002-2008 (in billions of dollars)

Federal Spending and SAFETEA-LU

Table 1-11: Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Total Highway Spending (Excluding Transportation Research) and Year-over-Year Percent Change, 2005-2009 (in billions of dollars)

Non-Residential Pavement Contractor Revenue Affected by Price Fluctuations

Table 1-12: Total Non-Residential Pavement Contractor Revenues and Yearover- Year Percent Change, 2002-2008 (in billions of dollars)

“Residential” Pavement Contractor Revenue Arcs Downward

Table 1-13: Total “Residential” Pavement Contractor Revenues and Yearover- Year Percent Change, 2002-2008 (in billions of dollars)

Roofing Contractor Revenues Decline 16% in 2008

Table 1-14: Total Roofing Contractor Revenues and Year-over-Year Percent Change, 2002-2008 (in billions of dollars)

Chapter 2: Introduction

Scope of the Report

Market Data Provided

Competitive Landscape

Economic and Market Trends

End User Markets

Methodology

Terms

A Note on Measures Used

Asphalt Primer

Production

Consumption

Applications

Supply

Demand

Asphalt Economics

Distribution and Seasonality

Chapter 3: The U.S. Liquid Asphalt Cement Market

U.S. Market Nears $12 Billion

Figure 3-1: U.S. Liquid Asphalt Cement Value of Apparent Consumption, 1999-2008 (in billions of dollars)

Table 3-1: U.S. Liquid Asphalt Cement Value of Apparent Consumption and Year-over-Year Percentage Change, 1999-2008 (in millions of dollars)

Real Consumption Lower, Prices Higher

Figure 3-2: U.S. Liquid Asphalt Cement Apparent Consumption by Volume and Average Price per Barrel, 1999-2008 (in millions of barrels)

2008 Production Drops 14%

Table 3-2: U.S. Liquid Asphalt Cement Apparent Consumption by Volume, Average Price per Barrel, and Year-over-Year Percentage Changes, 1999-2008 (in millions of barrels)

Components of Trade

Table 3-3: U.S. Liquid Asphalt Cement Value of Components of Trade, 1999-2008 (in millions of dollars)

Table 3-4: U.S. Liquid Asphalt and Road Oil Supply and Disposition, 1999-2008 (in millions of barrels)

Value of Net Shipments

Figure 3-3: U.S. Liquid Asphalt Cement Value of Net shipments (Shipments Less Exports) and Percent of U.S. Apparent Consumption, 1999-2008 (in billions of dollars)

Table 3-5: U.S. Liquid Asphalt Cement Value of Net Shipments and Yearover- Year Percentage Change, 1999-2008 (in millions of dollars)

Net Shipment Volume, Prices

Figure 3-4: U.S. Liquid Asphalt Cement Net Shipments (Shipments Less Exports) by Volume and Average Net Shipment Prices per Barrel, 1999-2008 (in billions of dollars)

Table 3-6: U.S. Liquid Asphalt Cement Net Shipments by Volume, Average Price per Barrel, and Year-over-Year Percentage Changes, 1999-2008 (in millions of barrels)

Value of Imports Volatile

Figure 3-5: U.S. Liquid Asphalt Cement Imports and Percent of U.S. Value of Apparent Consumption, 1999-2008 (in millions of dollars)

Table 3-7: U.S. Liquid Asphalt Cement Value of Imports and Year-over-Year Percentage Change, 1999-2008 (in millions of dollars)

Import Volume Growth at 4%, Prices at 25% in Ten-Year Period

Figure 3-6: U.S. Liquid Asphalt Cement Imports by Volume and Average Price per Barrel, 1999-2008 (in millions of barrels)

Table 3-8: U.S. Liquid Asphalt Cement Imports by Volume, Average Price per Barrel, and Year-over-Year Percentage Changes, 1999-2008 (in millions of barrels)

Export Share Improves

Figure 3-7: U.S. Liquid Asphalt Cement Value of Exports and Percent of U.S. Value of Shipments, 1999-2008 (in millions of dollars)

Table 3-9: U.S. Liquid Asphalt Cement Value of Exports and Year-over-Year Percentage Change, 1999-2008 (in millions of dollars)

Export Volume Growth at 20%, Prices at 11% in Ten-Year Period

Figure 3-8: U.S. Liquid Asphalt Cement Imports by Volume and Average Price per Barrel, 1999-2008 (in millions of barrels)

Table 3-10: U.S. Liquid Asphalt Cement Exports by Volume, Average Price per Barrel, and Year-over-Year Percentage Changes, 1999-2008 (in millions of barrels)

Market Forecast

Asphalt Cement Market Impacted by Supply, Demand and Commodity Pricing

Crude Costs to Remain Below 2008 Levels

Obama Administration Likely to Spend on Infrastructure

Coker Unit Projects Further Shift Refiner Interests Away from Asphalt

Figure 3-9: U.S. Liquid Asphalt Cement Value of Apparent Consumption Forecast, 1999-2008 (in billions of dollars)

2009 Production Increases Modest, Price Drops Significant

Table 3-11: U.S. Liquid Asphalt Cement Value of Apparent Consumption Forecast and Year-over-Year Percentage Change, 2008-2013 (in millions of dollars)

Consumption Growth at 8%, Price Fluctuates

Figure 3-10: U.S. Liquid Asphalt Cement Apparent Consumption by Volume and Average Price per Barrel Forecasts, 2008-2013 (in millions of barrels).

Table 3-12: U.S. Liquid Asphalt Cement Apparent Consumption by Volume, Average Price per Barrel Forecasts, and Year-over-Year Percentage Changes, 2008-2013 (in millions of barrels)

Chapter 4: The U.S. Asphalt Products Market

Asphalt Products Market Reaches $24 Billion

Figure 4-1: U.S. Asphalt Products’ Value of Apparent Consumption, 1999-2008 (in billions of dollars)

Table 4-1: U.S. Asphalt Products’ Value of Apparent Consumption and Year-over-Year Percentage Change, 1999-2008 (in millions of dollars)

Figure 4-2: Share of U.S. Asphalt Products’ Value of Apparent Consumption by Segment: Asphalt Paving Mixtures and Asphalt Shingle and Coatings, 2008 (percentage)

Total Quantities on the Decline

Figure 4-3: U.S. Asphalt Products’ Apparent Consumption by Quantity and Average Price per Metric Ton, 1999-2008 (in million metric tons)

Prices on the Rise

Table 4-2: U.S. Asphalt Products’ Apparent Consumption by Quantity, Average Price per Metric Ton, and Year-over-Year Percentage Changes, 1999-2008 (in thousand metric tons)

Figure 4-4: Share of U.S. Asphalt Products’ Quantity of Apparent Consumption by Segment: Asphalt Paving Mixtures and Asphalt Shingle and Coatings, 2008 (percentage)

Asphalt Paving Mixtures Market

Paving Mixtures Reaches $17 Billion

Figure 4-5: U.S. Asphalt Paving Mixtures Apparent Consumption and Percent of Total U.S. Asphalt Products’ Market, 1999-2008 (in billions of dollars)

Table 4-3: U.S. Asphalt Paving Mixtures Apparent Consumption Value and Year-over-Year Percentage Change, 1999-2008 (in millions of dollars)

Asphalt Paving Mixtures Quantity and Price

Figure 4-6: U.S. Asphalt Paving Mixtures Apparent Consumption by Quantity and Average Price per Metric Ton, 1999-2008 (in millions of metric tons)

Table 4-4: U.S. Asphalt Paving Mixtures Apparent Consumption by Quantity, Average Price per Metric Ton, and Year-over-Year Percentage Changes, 1999-2008 (in thousand metric tons)

Components of Trade

Table 4-5: U.S. Asphalt Paving Mixtures Components of Trade Value, 1999- 2008 (in millions of dollars)

Net Shipment Value, Quantity and Price

Figure 4-7: U.S. Asphalt Paving Mixtures Net Shipments Value (Shipments Less Exports) and Percent of U.S. Apparent Consumption, 1999-2008 (in billions of dollars)

Table 4-6: U.S. Asphalt Paving Mixtures Net Shipments Value (Shipments Less Exports) and Year-over-Year Percentage Changes, 1999-2008 (in millions of dollars)

Figure 4-8: U.S. Asphalt Paving Mixtures Net Shipments (Shipments Less Exports) by Quantity and Average Prices per Metric Ton, 1999-2008 (in million metric tons)

Table 4-7: U.S. Asphalt Paving Mixtures Net Shipments (Shipments Less Exports) by Quantity, Average Prices per Metric Ton, and Year-over-Year Percentage Changes, 1999-2008 (in million metric tons)

Import Value, Quantity, and Price

Figure 4-9: U.S. Asphalt Paving Mixtures Import Value and Percent of U.S. Apparent Consumption, 1999-2008 (in millions of dollars)

Table 4-8: U.S. Asphalt Paving Mixtures Import Value and Year-over-Year Percentage Changes, 1999-2008 (in millions of dollars)

Figure 4-10: U.S. Asphalt Paving Mixtures’ Imports by Quantity and Average Import Prices per Metric Ton, 1999-2008 (in thousand metric tons)

Table 4-9: U.S. Asphalt Paving Mixtures’ Imports by Quantity and Average Import Prices per Metric Ton, and Year-over-Year Percentage Changes, 1999-2008 (in thousand metric tons)

Export Value, Quantities and Prices

Figure 4-11: U.S. Asphalt Paving Mixtures’ Export Value and Percent of Total U.S. Shipment Value, 1999-2008 (in millions of dollars)

Table 4-10: U.S. Asphalt Paving Mixtures’ Export Value and Year-over-Year Percentage Changes, 1999-2008 (in millions of dollars)

Figure 4-12: U.S. Asphalt Paving Mixtures Exports by Quantity and Average Export Prices per Metric Ton, 1999-2008 (in thousand metric tons)

Table 4-11: U.S. Asphalt Paving Mixtures Exports by Quantity and Average Export Prices per Metric Ton, 1999-2008 (in thousand metric tons)

Asphalt Shingle and Coating Materials Market

Shingle and Coating Materials Slides to $7 billion

Figure 4-13: U.S. Asphalt Shingle and Coating Materials Apparent Consumption and Percent of Total U.S. Asphalt Products’ Market, 1999-2008 (in billions of dollars)

Table 4-12: U.S. Asphalt Shingle and Coating Materials Apparent Consumption and Year-over-Year Percentage Changes, 1999-2008 (in millions of dollars)

Asphalt Shingle & Coating Materials Quantity and Price

Figure 4-14: U.S. Asphalt Shingle and Coating Materials Apparent Consumption by Quantity and Average Price per Metric Ton, 1999-2008 (in millions of metric tons)

Table 4-13: U.S. Asphalt Shingle and Coating Materials Apparent Consumption by Quantity and Average Price per Metric Ton, and Yearover- Year Percentage Changes, 1999-2008 (in thousand metric tons)

Components of Trade

Table 4-14: U.S. Asphalt Shingle & Coating Materials Value of Components of Trade, 1999-2008 (in millions of dollars)

Net Shipment Value, Quantity and Price

Figure 4-15: U.S. Asphalt Shingle & Coating Materials Net Shipment Value (Shipments Less Exports) and Percent of U.S. Apparent Consumption, 1999-2008 (in billions of dollars)

Table 4-15: U.S. Asphalt Shingle & Coating Materials Net Shipment Value (Shipments Less Exports) and Year-over-Year Percentage Changes, 1999-2008 (in millions of dollars)

Figure 4-16: U.S. Asphalt Paving Mixtures Net Shipments (Shipments Less Exports) by Quantity and Average Net Shipment Prices per Metric Ton, 1999-2008 (in millions metric tons)

Table 4-16: U.S. Asphalt Paving Mixtures Net Shipments (Shipments Less Exports) by Quantity, Average Net Shipment Prices per Metric Ton, and Year-over-Year Percentage Changes, 1999-2008 (in millions metric tons) ..

Import Value, Quantity and Prices

Figure 4-17: U.S. Asphalt Shingle & Coating Materials Import Value and Percent of U.S. Apparent Consumption, 1999-2008 (in millions of dollars) ..

Table 4-17: U.S. Asphalt Shingle & Coating Materials Imports Value and Year-over-Year Percentage Changes, 1999-2008 (in millions of dollars)

Figure 4-18: U.S. Asphalt Shingle & Coating Materials Imports by Quantity and Average Import Prices per Metric Ton, 1999-2008 (in thousand metric tons)

Table 4-18: U.S. Asphalt Shingle & Coating Materials Imports by Quantity, Average Import Prices per Metric Ton, and Year-over-Year Percentage Changes, 1999-2008 (in thousand metric tons)

Export Value, Quantity and Prices

Figure 4-19: U.S. Asphalt Shingle & Coating Materials Value of Exports and Percent of Total U.S. Shipment Value, 1999-2008 (in millions of dollars)

Table 4-19: U.S. Asphalt Shingle & Coating Materials Exports and Yearover- Year percentage Changes, 1999-2008 (in millions of dollars)

Figure 4-20: U.S. Asphalt Shingle & Coating Materials Exports by Quantity and Average Export Prices per Metric Ton, 1999-2008 (in thousand metric tons)

Table 4-20: U.S. Asphalt Shingle & Coating Materials Exports by Quantity, Average Export Prices per Metric Ton, and Year-over-Year Percentage Changes, 1999-2008 (in thousand metric tons)

Market Forecast

Asphalt Products Market to Top $38 billion by 2013

Figure 4-21: U.S. Asphalt Products’ Market Forecast by Segment: Asphalt Paving Mixtures and Shingle and Coating Materials, 2008-2013 (in billions of dollars)

Paving Mixtures to Grow at 14% CAGR

Table 4-21: U.S. Asphalt Products’ Market Forecast by Segment and Yearover- Year Percentage Changes: Asphalt Paving Mixtures and Shingle and Coating Materials, 2008-2013 (in millions of dollars)

Figure 4-22: U.S. Asphalt Paving Mixtures Forecast by Quantity and Average Price per Metric Ton, 2008-2013 (in millions of metric tons)

Government Spending to Bolster Market

Table 4-22: U.S. Asphalt Paving Mixtures Forecast by Quantity, Average Price per Metric Ton, and Year-over-Year Percentage Changes, 2008-2013 (in millions of metric tons)

Roofing Products Will Soften in 2009

Figure 4-23: U.S. Asphalt Shingle and Coating Materials Forecast by Quantity and Average Price per Metric Ton, 2008-2013 (in millions of metric tons)

Slow Improvement by 2013

Table 4-23: U.S. Asphalt Shingle and Coating Materials Forecast by Quantity, Average Price per Metric Ton, and Year-over-Year Percentage Changes, 2008-2013 (in millions of metric tons)

Chapter 5: Competitive Overview

Introduction

Competitive Landscape Consists of Three Stages

Fragmented and Regional Business Landscape

Figure 5-1: Top 10 U.S. Asphalt Refiners by Production Capacity, 2008 (percentage)

Marathon Is Largest Refiner with 12% Share of Production Capacity

Table 5-1: U.S. Asphalt Production Capacity by Company, 2008 (barrels per day)

Low Refiner Capacity Utilization

Figure 5-2: Total Asphalt Refiner Net Production Yield and Excess Capacity, 1999-2008 (in thousand barrels per day)

Asphalt Considered Secondary and Low Value

Change in Perception on the Horizon?

Producers/Pavers Highly Fragmented

The U.S. Market Consists of Many Local Mini-Markets

Regional Supply Shortages

Asphalt Producer Profiles

Ergon, Inc

Overview

Performance

Products

Table 5-2: Selected Ergon Companies and Brands

Significant Events

Marathon Oil Corporation

Overview

Performance

Figure 5-3: Total Marathon Oil Corporation Revenue, 2004-2008 (in billions of dollars)

Figure 5-4: Marathon Oil Corporation Total Asphalt Yield and Percent of Total Refined Product Yield, 2004-2008 (thousand barrels per day)

Figure 5-5: Marathon Oil Corporation Total Asphalt Sales and Percent of Total Refined Product Sales, 2004-2008 (thousand barrels per day)

Products

Table 5-3: Selected Marathon Asphalt Products

Significant Events

NuStar Energy L.P.

Overview

Performance

Figure 5-6: NuStar Energy LP Total Sales by Segment: Product Marketing versus Service, 2005-2008 (in millions of dollars)

Figure 5-7: Share of NuStar Energy LP Refining Yield in Thousands of Barrels per Day by Major Product: Asphalt versus Other (Naptha, Marine Fuel Oil, etc), Q1-Q3 2008 (percent)

Products

Significant Events

SemMaterials (SemGroup L.P.)

Overview

Performance

Products

Table 5-4: Selected SemMaterials Products

Significant Events

Valero Energy Corporation

Overview

Performance

Figure 5-8: Total Valero Energy Corporation Revenue, 2004-2008 (in billions of dollars)

Figure 5-9: Valero Energy Corporation Total Lube & Asphalt Sales and Percent of Total Refined Product Sales, 2004-2008 (in billions of dollars) .

Figure 5-10: Valero Energy Corporation Total Asphalt Yield and Percent of Total Refined Product Yield, 2004-2008 (thousand barrels per day)

Products

Table 5-5: Selected Valero Products

Significant Events

Paving Companies

Oldcastle Materials (Oldcastle Inc./CRH Plc)

Overview

Performance

Figure 5-11: Total Oldcastle Materials Revenue, 2004-2008 (in billions of dollars)

Products

Significant Events

Vulcan Materials Company

Overview

Performance

Figure 5-12: Total Vulcan Materials Revenue, 2004-2008 (in billions of dollars)

Figure 5-13: Vulcan Materials’ Asphalt Mix and Concrete Revenue and Asphalt Mix Share of Total Operating Segment, 2004-2008 (in millions of dollars)

Figure 5-14: Vulcan Materials Company Asphalt Mix Price and Volume Performance, 2004-2008 (in dollars and thousand short tons)

Products

Significant Events

Chapter 6: Economic & Marketplace Trends

Economic Crisis Peaks

Real GDP Growth Projected at Negative 0.8% for 2009

Figure 6-1: U.S. Current-Dollar GDP vs. Real GDP, 2000-2009 (in trillions of dollars)

Inflation Rears Its Ugly Head

Figure 6-2: Percentage Changes in U.S. Current-Dollar GDP, Real GDP and the GDP Price Index, 2001-2009 (percentage)

Economic Future Uncertain

Asphalt Product Producer Prices Skyrocket

Figure 6-3: Estimated Share of Total Material Cost, 1999-2008 (percentage)

Sharp Increase in Liquid Asphalt in 2008

Figure 6-4: Asphalt Paving Mixture & Block Manufacturing Producer Price Index and the Asphalt Shingle & Coating Materials Manufacturing Producer Price Index, 1999-2008 (index)

By Contrast, Asphalt Roofing Slower Growth

Figure 6-5: Year-over-Year Percentage Change in Asphalt Paving Mixture & Block Manufacturing Producer Price Index and the Asphalt Shingle & Coating Materials Manufacturing Producer Price Index, 1999-2008 (percentage)

Price Increases by Product

Paving Products: Mixtures See 17% Gain in 2008

Figure 6-6: Asphalt Paving Product Manufacturing Producer Price Indexes: Emulsified Asphalt, Other Liquid Asphalt and Tar Paving Materials, Asphalt and Tar Paving Mixtures (excluding liquid), 2005-2008 (index)

Figure 6-7: Year-over-Year Percentage Change in Asphalt Paving Product Manufacturing Producer Price Indexes: Emulsified Asphalt, Other Liquid Asphalt and Tar Paving Materials, Asphalt and Tar Paving Mixtures (excluding liquid), 2006-2008 (percentage)

Roofing Products See Relatively Modest Price Increases in 2008

Figure 6-8: Asphalt Roofing Product Manufacturing Producer Price Indexes: Roofing Asphalts & Pitches, Coatings, and Cements; Prepared Asphalt & Tar Roofing & Siding Products, 1999-2008 (index)

Figure 6-9: Year-over-Year Percentage Change in Asphalt Roofing Product Manufacturing Producer Price Indexes: Roofing Asphalts & Pitches, Coatings, and Cements; Prepared Asphalt & Tar Roofing & Siding Products, 1999-2008 (percentage)

Asphalt Input Prices: Crude Up 75%+

Figure 6-10: Crude Petroleum Price Indexes: Domestic Production and Imports, 1999-2008 (index)

Figure 6-11: Year-over-Year Percentage Change in Crude Petroleum Price Indexes: Domestic Production and Imports, 1999-2008 (percentage)

Coker Projects May Further Reduce Asphalt Supply

Pavement Input Prices: Liquid Asphalt and Aggregate Up 7%

Figure 6-12: Primary Asphalt Pavement Commodity Input Price Indexes: Asphalt and Construction Aggregates, 1999-2008 (index)

Figure 6-13: Year-over-Year Percentage Change in Primary Asphalt Pavement Commodity Input Price Indexes: Asphalt and Construction Aggregates, 1999-2008 (percentage)

Other Asphalt Pavement Input Costs

Figure 6-14: Secondary Asphalt Pavement Commodity Input Price Indexes: Natural Gas and No. 2 Diesel Fuel, 1999-2008 (index)

Figure 6-15: Year-over-Year Percentage Change in Asphalt Pavement Secondary Commodity Input Price Indexes: Natural Gas and No. 2 Diesel Fuel, 1999-2008 (percentage)

Concrete Construction Input Prices High

Figure 6-16: Concrete Construction Primary Commodity Price Indexes: Portland Cement, Construction Aggregates and Carbon Steel, 1999-2008 (index)

Figure 6-17: Year-over-Year Percentage Change in Concrete Construction Primary Commodity Price Indexes: Portland Cement, Construction Aggregates and Carbon Steel, 1999-2008 (percentage)

Concrete May Benefit

Less Road Travel Not Easing Pressure on Aging Roads

Figure 6-18: Total 12-Month Total Vehicle Distance Traveled versus Gasoline Producer Price Index, January 1998-August 2008 (billion miles)

Prices and Supply Jeopardizing Road Maintenance Asphalt Paving Budgets

Figure 6-19: Monthly Asphalt Prices by Selected State, January 2005- November 2008 (in dollars)

Summer Delays and Postponements

Administrations Get Creative

Warming Weather Trends Benefit Marketplace

Weather Disasters Prompt Government Emergency Financial Response

Asphalt as a Green Industry

Reclaimed Road Surfaces The Future of Municipal Paving

RAP Highest Recycling Rate Among Recycled Industrial Products

Industry Leadership in Use of Other Waste Products

Table 6-1: Asphalt Industry Recycling’s Report Card versus Other Industries, 2008

Labor Shortages and Immigration to Hamper Road Building

Illegal Immigrants May Not Fill the Ranks

Industry Unattractive to Younger Work Force

Warm Mix Asphalt Positioned to Usurp Hot Mix

Chapter 7: End User Markets

Paving Industry Consumes 93%

Asphalt Roofing Suffers with Residential Construction Downturn

Asphalt Roofing No Rebound in Sight

Paving Has A Friend in Obama

Figure 7-1: Estimated Share of U.S. Asphalt Consumption by End-User Market, 2008 (percentage)

Total Construction Spending Declines

Figure 7-2: Total U.S. Construction Spending, 2002-2008 (in billions of dollars)

Table 7-1: Total U.S. Construction Spending and Year-over-Year Percent Change, 2002-2008 (in billions of dollars)

Non-Residential Spending Starts to Slow in 2008

Figure 7-3: Total Non-Residential Construction Spending and Percent of Total Construction Spending, 2002-2008 (in billions of dollars)

Table 7-2: Total U.S. Non-Residential Construction Spending and Yearover- Year Percent Change, 2002-2008 (in billions of dollars)

Residential Spending Nosedives

Figure 7-4: Total Residential Construction Spending and Percent of Total Construction Spending, 2002-2008 (in billions of dollars)

Table 7-3: Total U.S. Residential Construction Spending and Year-over- Year Percent Change, 2002-2008 (in billions of dollars)

Highway & Street Construction Down from Mid-Decade Growth Rates

But Growth Curtailed Somewhat by Delays and Other Constraints

Figure 7-5: Total Highway & Street Construction Spending and Percent of Total Non-Residential Construction Spending, 2002-2008 (in billions of dollars)

Table 7-4: Total Highway & Street Construction Spending and Year-over- Year Percent Change (in billions of dollars)

State & Local Pavement Spending at $50 Billion for 2008

Figure 7-6: Total State & Local Pavement Spending and Percent of Total Highway & Street Construction Spending, 2002-2008 (in billions of dollars) 175 Table 7-5: Total State & Local Pavement Spending and Year-over-Year Percent Change, 2002-2008 (in billions of dollars)

Figure 7-7: Share of U.S. State & Local Highway & Street Construction Spending by Type of Construction, 2007 (percentage)

Federal Spending and SAFETEA-LU

Figure 7-8: Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Total Highway Spending (Excluding Transportation Research), 2005-2009 (in billions of dollars)

Table 7-6: Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) Total Highway Spending (Excluding Transportation Research) and Year-over-Year Percent Change, 2005-2009 (in billions of dollars)

New Administration Could Mean Boon for Asphalt

Non-Residential Pavement Contractor Revenue Affected by Price Fluctuations

Figure 7-9: Total Non-Residential Pavement Contractor Revenues and Percent of Total Highway & Street Construction Spending, 2002-2008 (in billions of dollars)

Table 7-7: Total Non-Residential Pavement Contractor Revenues and Year-over Year Percent Change, 2002-2008 (in billions of dollars)

“Residential” Pavement Contractor Revenue Arcs Downward

Figure 7-10: Estimated Total “Residential” Pavement Contractor Revenues and Percent of Total Highway & Street Construction Spending, 2002-2008 (in billions of dollars)

Table 7-8: Total “Residential” Pavement Contractor Revenues and Yearover- Year Percent Change, 2002-2008 (in billions of dollars)

Roofing Contractor Revenues Decline 16% in 2008

Figure 7-11: Total Roofing Contractor Revenues and Percent of Total Construction Spending, 2002-2008 (in billions of dollars)

Table 7-9: Total Roofing Contractor Revenues and Year-over-Year Percent Change, 2002-2008 (in billions of dollars)

Appendix: Selected Corporate Addresses

Appendix: Selected Associations Addresses

Abstract

Though asphalt occurs naturally, the majority of today’s asphalt is produced as a residual product of the crude oil refining process. Most refiners focus on refining more expensive, lighter, “sweeter” crudes to produce the higher-value products such gasoline and diesel fuel. In all, about two to three percent of all refined crude oil in the United States becomes asphalt.

Most crude oil asphalt comes from less expensive, heavier, “sour” crude oils rather than the more expensive lighter, sweet crude oils. For crude oil refiners asphalt accounts for a much larger portion of the product refined.

Demand for asphalt is driven to a small degree by the private sector, but most demand comes from federal, state, and local governments. Funding for highway and road infrastructure construction and maintenance plays the largest role, but other public sector projects such as airport runway and taxiway construction can also affect demand. Since funding for highway and road construction and maintenance projects are often set for several years, demand tends to remain rather constant growing more or less at the rate of inflation. However, the recent prospect of massive infrastructure spending to stimulate growth in the U.S. economy under the new Obama administration suggest demand will likely increase significantly in the coming years.

Specialists in Business Information (SBI) estimates the U.S. market for liquid asphalt cement totaled $11.7 billion in 2008, up 34% from $8.7 billion in 2007. This report explains why, and forecasts what lies ahead for the asphalt industry from 2009 - 2013.

Scope of the Report

This SBI report contains data and analysis describing the U.S. market for asphalt. The report focuses on the primary commodity market, refined liquid asphalt cement, and the secondary product market, asphalt paving mixtures. In addition, limited data and analysis are provided for the asphalt shingle and coating materials manufacturing market (asphalt roofing products). Chapter 3 covers the liquid asphalt cement market while Chapter 4 covers the asphalt paving mixtures and asphalt roofing products market. SBI refers to the asphalt paving and roofing markets as the asphalt products market. Chapter 5 covers the competitive landscape of asphalt refiners and blenders with data and analysis on U.S. asphalt refining capacity and utilization including profiles of major asphalt refiners, blenders, and paving mixture manufacturers. Chapter 6 looks at economic and market trends affecting the asphalt industry. Included are an analysis and forecast through 2009 of gross domestic product (GDP), an in-depth cost and price analysis of various components of the asphalt market as well as the competing concrete market, and a look at the shift to warm mix, eco-challenges and weather/seasonality trends.. Finally, Chapter 7 provides a snapshot of the two end-user markets, asphalt paving and asphalt roofing.

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