The Asphalt Paving Market in 2021
The asphalt paving market has been surprisingly resilient during the tumultuous year of 2020. Despite a global pandemic putting a hamper on the world’s economy, the paving and asphalt market grew. It’s expected to be even larger in 2021. However, the damage done by the pandemic was big. Even with global economic growth predicted at 5.4% in 2021, it would still leave the economy a full 6.5% lower than the pre-COVID January 2020 projections. Of course, there is much uncertainty about any projections, as the majority of them base assumptions COVID responses. Lockdown, vaccine roll outs, and surging cases make predictions more uncertain than ever.
Fortunately, the asphalt and paving industry seems to be weathering this uncertainty better than most.
What do market trends say?
The demand for materials is expected to grow to 27.6 million tons in terms of asphalt used for paving products. This is a represents total demand for asphalt, used in roofing, paving, and various products, and it is up 3%. Growth has been spurred two large factors. Demand for asphalt in paving alone is expected to rise 3% as well, to about 22 million tons by the end of 2021.
A good federal highway budget
The US government is currently undergoing a massive infrastructure repair and maintenance drive. The American Society of Civil Engineers recently gave the US infrastructure a D+ rating. This means it is at or near failure. In order to improve it, money has been earmarked to be spent on infrastructure and transportation. The INVEST in America Act has seen a massive increase in federal spending on infrastructure. For the fiscal year of 2021, the bill includes $158.3 billion dollars of infrastructure spending. Of that money, $78.7 billion is marked for surface transportation programs, I.E. the highway system. Another $75 billion is for economic recovery from the coronavirus pandemic. This $75 billion is to be spent on housing and transportation infrastructure.
The pandemic and mortgage rates
2020 Gave home buyers at least one good thing — low mortgage rates. The average 30 year mortgage rate dropped from March to December. They aren’t predicted to stay low through 2021, but that means enough home buyers have made their purchases already, and some will take advantage before mortgage rates get too high again. For the asphalt and paving market, this is a boon. New home buyers need work done on their houses, this means roofing, driveway paving, and waterproofing. All are renovations well-suited by the use of asphalt.
Other 2021 predictions that will affect the market
What will happen with COVID-19?
The main story of 2020 has been the coronavirus pandemic. After jumping from animals to people in late 2019 in Wuhan China, the virus has made its way around the world. The virus is an extremely contagious bio-aerosol, meaning it is spread via water droplets, some small enough to be carried in the air. In order to halt its spread, people need to avoid congregating closely, touching the same things, sharing food and beverages and much more. Unlike the similarly-spread flu virus, COVID has a mortality rate ranging from 0.3% to over 6% depending on the health infrastructure of the country. Yemen has a death rate of 29%. Office spaces and other workplaces are some main points of adult congregation, so it has left millions unemployed or working remotely. Various countries have had to impose lockdowns and other strict rules to control its spread, with varying success. Some countries, like New Zealand, have celebrated beating the virus altogether. Meanwhile, countries like the UK. have had to use intermittent lockdowns once cases start surging. The virus has affected pretty the life of pretty much every single person on the planet.
Any predictions about market activities in 2021 are going to be heavily based on what happens with the coronavirus.
The vaccine roll-out
A vaccine is predicted to be readily available to every American at least by the late summer or early autumn of 2021. It is already available to front-line healthcare workers and those most at-risk. Obviously, if large-scale vaccinations are happening, then we can get back to life (mostly) as usual. A large portion of the population will continue to work remotely, which will shrink demand for future roads and transport infrastructure. Most people however, will get back to work. This will increase demand because businesses and people will be, well, back in business. Workers making money will also need roads, and infrastructure to return to their workplaces, further increasing demand. Businesses that have been shuttered since the pandemic began, like some restaurants, hotels, and gyms, will again have the clients and income to support renovations.
The biggest economic spurt of 2021 will no doubt be the final defeat of COVID-19 and a return to life as normal. Hopefully, we have learned a bit about caution on the way, like frequent hand washing and avoiding touching our faces, to avoid another economy-halting pandemic in our lifetimes.
Although market numbers are going up for construction and paving regardless of coronavirus, the big boom in the market expected in 2021 is going to come from beating this disease.
Meeting your 2021 paving needs
If you are preparing for your business to open back up and need some work done on your parking lot, sidewalks, or garage, Reliable Paving has got you covered. Our experienced team of over 200 paving contractors can handle a job of just about any size on time and on budget. Our services include paving, repairs and maintenance for concrete and asphalt, ADA compliance, striping, sealcoating, and more. As 2021 rolls on and the economy picks up, don’t put off the renovation your business needs. Contact us today, and we can get started on getting your business ready for when life gets back to normal.