International building materials producer CRH expects increased US infrastructure funding to support asphalt and aggregate demand in the Americas next year, outweighing a weaker residential construction market.
Asphalt sales volumes in January-September were 6pc higher than the same period in 2021, bolstered by large projects, according to CRH. Aggregate volumes for the same period grew by 1pc, with higher demand in the Great Lakes and south regions offsetting lower activity in the west and northeast.
Americas paving and construction services for the first nine months of the year grew by 27pc from the same period last year because of backlogs and large projects, CRH said.
Sales are starting to rise from increased US infrastructure funding that was approved last year, the company said. Publicly funded projects comprise about 40pc of CRH's activity in the US.
"We are now beginning to see these additional funds flowing through the system, with positive momentum in bidding activity, contract awards and indeed our backlogs," CRH chief executive Albert Manifold said. "Fundamentals across North America and Europe remain positive, supported by robust infrastructure and non-residential demand, which is offsetting a softer residential level of activity."
New housing builds in the US declined for a second consecutive month in October, falling by 4.2pc to a seasonally adjusted annual rate of 1.43mn homes, according to the US Census Bureau and US Department of Housing and Urban Development.
The decline in residential construction has dented demand for building materials such as asphalt shingles, causing roofing flux prices in the US Gulf coast to fall by 22pc since July to $582.50/st fob in November.
CRH expects the slowdown in residential demand to be short-lived.
Third-quarter sales in the Americas Materials division – which supplies aggregate and asphalt – rose by 19pc from a year earlier, with higher pricing and cost controls outweighing weather disruptions in some US regions. Sales in the comparable European division fell by 9pc on softer activity in the residential sector, higher energy costs and currency headwinds. Building products sales climbed by 36pc in the quarter, helping to lift total third-quarter sales by 13pc from a year earlier.
Falling US home construction could be offset by remodeling demand, which has remained steady with support from record levels of home equity and housing stocks, allowing for a boom for reinvestments in homes built in the early 2000s, the company said. Non-residential demand is also expected to grow with increased investment in manufacturing facilities.
The company also had a favorable forecast for Europe, with sustained government funding for infrastructure in central and eastern Europe, and the need for urban retrofitting in western Europe.
CRH said it plans to double its use of recycled asphalt in road paving to 50pc over the next decade.
