Construction firms see tepid private demand in 2025

Market: Oil products
30/04/25

Building materials suppliers Martin Marietta and Vulcan Materials anticipate market uncertainty and elevated interest rates to hamper private construction demand this year.

Some large commercial projects have been paused because of macroeconomic volatility stemming from US trade policies, according to remarks made by Vulcan's chief executive Tom Hill on an earnings call today.

The current interest rate environment is also expected to stifle residential construction activity this year, according to Hill. The CME FedWatch tool showed a 95.5pc probability that the US Federal Reserve would hold its target interest rate steady at its next meeting on 7 May.

Martin Marietta's chief executive Howard Nye echoed the same uncertainty around macroeconomic conditions and affordability constraints limiting residential construction growth.

Hill and Nye also shared similar remarks on tariffs, and both noted the potential for increased costs but minimal impact on earnings.

Both companies also pointed to data centers as a bright spot on the private demand side with warehouse construction stabilizing following years of declines.

Sentiment around public demand was more positive with both Martin Marietta and Vulcan Materials expecting continued growth in public construction activities at the federal and state level.

Hill mentioned more than half of Infrastructure Investment and Jobs Act (IIJA) highway funds are still yet to be spent. Nye said IIJA contributions will peak next year and expected the potential reauthorization of federal surface transportation programs to focus on roads, bridges and ports.

Nye also said the push for a new $200/yr fee on electric vehicles was a "really good start" for tackling issues surrounding the Highway Trust Fund.

Asphalt revenue jumps

Martin Marietta's asphalt and paving revenue grew by 37pc to $80mn in the first quarter of 2025 compared to the same quarter last year with shipments up 26pc over the same period. The boost was supported by higher volumes in California, according to the company's earnings report.

Some market participants in California noted demand for liquid asphalt was slightly above forecasts in January with the National Oceanic and Atmospheric Administration reporting below-average precipitation levels for the month.

Martin Marietta's aggregates shipments also increased by roughly 7pc in the first quarter.

Vulcan's asphalt revenue rose by about 12pc to roughly $209mn in the first quarter of 2025 compared with the same quarter last year. Shipments were also up by 4pc over the same period.

Hill noted savings on liquid asphalt reached around $3mn. Wholesale prices on the Gulf coast averaged about $397/st over the first quarter, 2pc below values from the same time in 2024.

Aggregates shipments slipped by nearly 1pc in the first quarter of 2025 compared to the same period last year. Vulcan noted frigid temperatures hampered volumes in the quarter as acquisitions made last year helped offset some negative effects from adverse weather.

Overall, Martin Marietta reported a gross profit of $335mn on revenue of $1.35bn in the first quarter. This is compared with a profit of $272mn on revenue of $1.25bn in the same quarter last year.

Vulcan reported a gross profit of $365mn in the first quarter on revenue of about $1.64bn. This is up from a gross profit of $305mn in the first quarter of 2024 on revenue of roughly $1.55bn.

By Cobin Eggers

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The provision would also hurt US biofuel producer LanzaJet, which has imported lower-carbon Brazilian sugarcane ethanol as a SAF feedstock to the chagrin of domestic corn ethanol producers. The bill would also require regulators to set more granular carbon intensity calculations for different types of animal manure biogas projects, all of which are treated the same under current rules. Other lifecycle emissions models treat some dairy projects at deeply negative carbon intensities. Those changes to carbon intensity calculations and feedstock eligibility would kick in starting next year, meaning current rules would remain intact for now. The proposal would however phase out the ability of clean energy companies without enough tax liability to claim the full value of Inflation Reduction Act subsidies to sell those tax credits to other businesses. That pathway, known as transferability, would end for clean fuel producers after 2027, hurting small biodiesel producers that operate under thin margins in the best of times as well as SAF startups that were planning to start producing fuel later this decade. Markets unresponsive, but prepare for new possibilities There was little immediate reaction across biofuel, feedstock, and renewable identification number (RIN) credit markets, since the bill could be modified and most of the changes would only take force in the future. But markets may shift down the road. Limiting eligibility to feedstocks originating in North America for instance could continue recent strength in US soybean oil futures markets. July CBOT Soybean oil futures closed 3pc higher on Monday at 49.92¢/lb on the news and have traded even higher today. The spread between soybean oil and heating oil futures is then highly influential for the cost of D4 biomass-based diesel RIN credits, which are crucial for biofuel margins and have recently surged in value to their highest prices in over a year. The more lenient carbon accounting will also help farmers eyeing a long-term future in renewable fuel markets and will support margins for ethanol and biodiesel producers reliant on crops. Corn and soy groups have pushed the government for less punitive emissions tracking, worried that crop demand could wane if refiners could only turn a profit by using lower-carbon waste feedstocks instead. The House bill, if passed, would still run up against contradictory incentives from other governments, including SAF mandates in Europe that restrict fuels from crops and California's efforts to soon limit state low-carbon fuel standard credits for fuels derived from vegetable oils. By Cole Martin and Matthew Cope Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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