The growth in the construction industry with rising investments is accelerating the demand for aggregates.
The Global Aggregates Market Was Valued At US$ 465.2 Bn In 2020 Is Expected To Reach US$ 657.2 Bn By 2027, And Is Expanding At A CAGR Of 3.5% During The Forecast Period
The accelerating growth in the construction industry primarily from the emerging economies is proliferating the market for aggregates. The factors such as increasing population, growing need for residential development, and increasing industrialization is proliferating the growth of aggregates from the emerging economies. Furthermore, the rising accidents related to the collapse of infrastructure from developed nations are increasing the need to upgrade the infrastructure. Additionally, the construction industry in the U.S. is witnessing a significant rise owing to the increasing urbanization which has increased from 76% to 82% from 1992 to 2017 and is further expected to continue to increase. The urban population across the U.S. is rising and to meet the rising housing needs the investments across residential construction segment are being made in the country, which is supporting the growth of aggregates market.
The accelerating demand for recycled aggregates is further supporting the market growth. According to the U.S. Geological Survey Fact Sheet on Recycled Aggregates, in the U.S. annually, more than 100 million tons of asphalt is recovered of which 80% is recycled. Of the total recycled asphalt, two-third is used for road base as recycled aggregate. The increasing demand for recycled aggregates is gaining traction throughout the construction industry in the U.S. There is a growing shortage of available landfilling sites for disposing of the construction and demolition waste. Owing to the relative homogeneity of the materials produced from the demolition waste, it is easier to recycle. This is encouraging the governments and players across the construction industry to innovate and recycle the aggregate for reuse. Companies such as Lafarge and Dufferin Aggregates provide recycled aggregates to meet the rising demand from the consumers for recycled aggregates. With the growing demand and developments by the industry players, the market is set to witness a stable growth rate over the years.
Moreover, the high costs associated with the production of aggregates are hampering market growth. Though aggregate is a low-cost material the costs associated with the industry such as vehicle and machinery cost and transportation costs are significantly high. The transportation costs are high owing to the heavy-weight of the material. Nearly 50% of the administration and logistics costs incurred in the aggregate industry comprises transportation costs. The additional costs across the industry are restraining the growth of the aggregates market globally.
In terms of region, the North America aggregates market is growing with a CAGR of 4.3%. The major demand for aggregate across the region is driven by the demand from the United States, which accounted for 84% of market share in 2020. Investments in the residential application segment in the U.S. are very high to provide affordable infrastructure to their people. For instance, in October 2020, Governor Cuomo announced the completion of 332 affordable housing apartments for families and adults with disabilities. Projects like these are supporting the growth of the aggregates market across North America. In addition to this, the rising infrastructure investments across Canada are anticipated to support the growth of the aggregates market in the region. Additionally, amid the pandemic the Government of Canada has increased the investment in the construction industry to create new job opportunities and support the people across the country, further accelerating the demand for aggregate.