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Vulcan is well-positioned to benefit from infrastructure spending, but near-term headwinds remain

Vulcan is well-positioned to benefit from infrastructure spending, but near-term headwinds remain

Aggregates producer Vulcan Materials is well positioned to benefit from the ongoing recovery in US construction spending. We forecast stronger demand growth for the public sector and moderate growth for the private sector. Accounting for around 40% of supplies, public sector demand is generally more stable and projects, particularly road construction, are more aggregate intensive per dollar of expenditure. Federal funding power has weakened as better vehicle mileage and inflation have reduced the purchasing power of the $0.18 per gallon gasoline tax, which has remained unchanged since 1993. The FAST Act, passed in December 2015, provided stability and short-term funding security, but did not solve the still-struggling gasoline tax. However, long-term federal funding totaling $1.2 trillion was approved at the end of 2021.