Will Canada’s ready-mix concrete market strengthen in 2014?
The construction season is in full swing around the country and the ready mixed concrete industry is looking to gain momentum in some of the larger urban areas. The condominium market has been strong in previous years in major centres but that market is slowing. The general rule is that the concrete industry is about a year behind in work and is always looking ahead to predict future sales. The Canadian Ready-Mix Concrete
Association (CRMCA) continues its work in their respective markets to promote existing concrete technologies and to market new technologies and solutions with the purpose of growing the market. The following is a forecast of the ready mixed concrete market for 2014, using statistics from the Canada Mortgage and Housing Market Analysis group for residential construction and the Cement Association of Canada’s quarterly report, the Canadian Monitor.
Some of the trends that will continue to impact the market are mortgage rates, employment, income, net migration and population. Mortgage rates will to remain low, setting the stage for a continued healthy housing demand. Employment will increase 1.5 per cent in 2014 and continue to grow to 1.8 per cent in 2015, which will keep incomes growing and support demand for construction. The resulting income growth will maintain at market, at least on the residential side, for the next couple of years. Net migration into the country will be above its historical average so immigrants will continue to drive the construction sector. The decline in population in the 25-34 age range by the end of the decade will lower the demand for multi-unit buildings, which will impact single-family housing in the long run.
All the provinces saw an increase in building permits in January 2014, except for Quebec. The largest gains were found in Alberta, British Columbia and Ontario, an 8.5 per cent increase, which followed a 4.8 per cent increase in December 2013. Commercial and residential permits drove growth in the Ontario market, while in Alberta and British Columbia it mainly came from residential. The decrease in institutional permits caused the drop in Quebec. Even with these numbers, use of Portland cement reduced -3.3 per cent. The ready mixed concrete industry is the largest user of cement, consuming between 75 and 77 per cent of the total in that market.
Below are non-residential construction permits as: (Millions of Current Dollars)
- TOTAL: $2,362.3
- Industrial: 274.8
- Commercial: 1,501.7
- Government and Institutional: 585.8
- Breakdown by Region
- Atlantic Provinces: 93.1
- Québec: 426.0
- Ontario: 901.7
- Prairie Provinces: 701.1
- British Columbia and Territories: 240.4
This represents almost a 20 per cent increase for all of Canada from January 2013.
The residential housing starts from last year finished in the range of 187,000 units, including singles and multi-residential units. This year’s forecast looks at a total of approximately 176,000 units with a breakdown of 57,000 singles and 103,000 classified as other for centres with populations greater than 10,000. This leaves another 15,000 units in the remainder of Canada. The breakdown by region is as follows for the first quarter:
- Atlantic Provinces: 5,266
- Quebec: 34,374
- Ontario: 50,611
- Prairies: 43,954
- British Columbia: 26,377
- Quarterly Total Est.: 160,582
In all sectors this type of growth provides a positive environment for the use of ready mixed concrete. Slabs, foundations, infrastructure, floors, columns, bridges, curbs and sidewalks, and pavements all provide markets for concrete usage as the backbone for these structures. A rule of thumb for buildings is that roughly 10 per cent of the structure will use concrete. There is plenty of opportunity to expand this market with existing and new technologies. For example, converting parking lots from flexible pavements to concrete allows for significant expansion of the market, insulating concrete forms increase both multi and residential usage. Also, pervious pavement allows for expansion of existing infrastructure and meets storm management specifications, and architectural and self-consolidating concrete offer advantages in design and construction of buildings. Add on the sustainable benefits and long-term durability of these technologies and you create an environment for construction that continues to grow and assist the Canadian economy as it moves forward.