Damato of the Day Is... "Asphalt, Asphalt, Wherefore Art Thou, Asphalt?"

We recently reviewed a report by The Freedonia Group, Cleveland, Ohio titled Roofing – US Industry Study with Forecasts for 2015 & 2020. One of another group of Freedonia reports drew our attention this week as it presents a forecast on the roofing industry’s top commodity: asphalt.

The report, titled Asphalt – US Industry Study with Forecasts for 2015 & 2020, projects growth in asphalt demand of 7.4 percent annually through 2015. That eclipses the predicted growth in roofing over the same time period by over 170 basis points. Nice for the asphalt industry, but the key question for the roofing industry, especially over the past several years, is, “What does that mean for the price of asphalt roofing materials?” The Freedonia report predicts that the growth in asphalt pricing will moderate, which will lead to growth in the use of asphalt, primarily paving asphalt, which accounts for 80 percent of asphalt consumption.

The price of asphalt roofing has been top of mind over the past few months as the past tropical weather season did not produce any spikes in demand. While remaining at historical highs, prepared asphalt material prices should moderate and hopefully usher in a period of stability. The idea that asphalt roofing prices will go up and never come down is one that is dangerous to consider. I still recall one ten-year period in my career when asphalt roofing prices charted down, making things interesting to say the least.

At any rate, it is good to once again read a report that predicts growth in our sector of the construction economy. And “moderating” pricing in raw materials is generally good for business. Almost anything, like material prices or the availability of qualified labor, that is predictable in the roof-contracting business is good! I hope Freedonia is either right or perhaps a little off on the low side of their growth predictions.

 The full report, Study #2793, is available for $5,100 from The Freedonia Group. Check it out here - http://www.freedoniagroup.com/DocumentDetails.aspx?ReferrerId=FE-WEBAN&studyid=2793