MarketLine Blog

What Remains the Most Prevalent Segment within the Construction Materials Market?

 

In spite of continuing financial and economic uncertainty impacting the global economy, the global construction materials market has recovered from decline in 2009 with strong growth in 2010 and 2011. Growth in 2011 was fairly universal, with both developing and developed markets seeing a healthy return to expansion.

The global market grew by 6.4% in 2011, to reach a value of $664.4 billion, representing a compound annual growth rate (CAGR) of 3.6% in the period spanning 2007-2011.

Sand, gravel, other aggregates remains the most prevalent segment within the market, followed by the cement segment.

In terms of market value, Asia-Pacific accounts for over two thirds of global revenues. This is primarily due to flourishing developing markets, such as China, where investment in new infrastructure remains high.

The construction materials market is heavily dependent on the construction & engineering industry, with construction companies serving as key buyers. Infrastructure investment is therefore extremely important to the potential value of the construction materials industry. It is therefore highly important that in emerging markets such as China, India and Brazil, infrastructure projects are likely to continue on a very large scale. Players will therefore continue to see increased reliance upon such markets for their future revenue streams.

Equally important is the regulatory environment surrounding the construction industry: there are certain standards and requirements with which construction companies must align their operations. An increasing prevalence of ‘green’ initiatives could have a potential impact upon the construction materials market itself. As governments begin to enforce legislation mandating the use of certain eco-friendly materials in construction projects, such as France’s ‘Decree on the use of wooden materials in certain buildings’ of 2010, players in the construction materials market may see revenues eaten into as substitute materials are used out of legal necessity. However, the advantages of using construction materials will mean that players will still enjoy increased demand in developing nations.

The global construction materials market has experienced fairly strong overall growth in recent years, having recovered from decline in 2009 with strong growth in 2010 and 2011. The market is expected to grow strongly over the forecast period to 2016.

Entry barriers to the construction materials market include high capital outlay and fixed costs involved in setting up production plants.

Posted in Construction.

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