How big is the construction materials industry?
The construction materials industry encompasses the production and supply of various raw materials and products essential for construction activities. This includes materials like cement, aggregates, metals, bricks, ceramics, glass and wood. The industry caters to two key sectors - infrastructure construction that involves building roads, bridges, airports, seaports etc. and real estate construction comprising residential and commercial buildings.
Overall Market Size
The total global market size for construction materials was estimated to be around $3.6 trillion in 2020. It is forecast to grow at a CAGR of 7.7% between 2020-2027 to reach $5.6 trillion by 2027. The growth will be driven by rapid urbanization, population growth and the corresponding need to build more residential homes, office spaces, hospitals, schools, retail outlets etc. Emerging economies are expected to drive a major proportion of this growth.
The top 5 materials by market size are:
- Cement - The global cement market was sized at around $410 billion in 2020. Cement is essential for manufacturing concrete which is the second most consumed material after water globally.
- Aggregates - Sand, gravel and crushed stone are the key aggregates used in concrete, road base and coverings, and asphalt. The global aggregates market was estimated to be $487 billion in 2020.
- Bricks - Bricks are the commonly used materials for building walls and other masonry structures. The global bricks market was valued at $180 billion in 2020.
- Metals - Steel, aluminum and other metals have major applications across buildings, bridges and other construction sectors. The global construction metals market was around $395 billion in 2019.
- Ceramics - Ceramic products like tiles, sanitary ware and fixtures have become important interior materials for homes and offices. The global ceramics market was approximately $267 billion in 2020.
Other key materials include timber products like plywood, glass, plastics and asphalt which has significant usage in road construction.
Concrete - The Most Consumed Material
Concrete made using cement, aggregates and water is the single most widely consumed construction material across the world. The global concrete market was valued at over $300 billion in 2020. As per industry estimates, China utilized about 2.41 billion cubic meters of concrete in 2020 while India consumed around 423 million cubic meters.
Developed markets like United States and Japan also have sizable concrete consumption fueled by reconstruction of existing infrastructure. The precast concrete market is on the rise as well. Precast concrete products are preferred for faster project execution through modular construction methods.
Asphalt Market
Asphalt which is made using oil refinery byproducts is primarily used for road, highway and parking lot construction. Its key advantage is flexibility compared to concrete, enabling it to better withstand stresses from vehicular movement. The global asphalt market demand was around 2.5 billion metric tons in 2020. The market size was estimated at $70 billion with United States being the largest market followed by China and India.
Construction Steel Market
Steel is used across construction in the form of rods, bars, pipes, sheets and girders. Reinforced steel is a vital component for structures likes slabs, columns and foundational piles. The global steel market for construction applications was valued at around $900 billion in 2019. China accounted for over half of this demand at 527 million metric tons. Developing countries are driving growth based on urban housing and infrastructure projects.
Wood/Timber Products
Wood is used for making doors, windows, roof trusses and frames along with plywood, oriented strand boards and glulams. While advanced economies use more wood products for residential construction, developing markets rely on it for concrete formwork. The global wood products market was estimated to be around $180 billion in 2020 excluding furniture applications.
Major Regional Markets
The Asia Pacific region dominates the construction industry accounting for over 55% of the global construction spend in 2020. Within APAC, China had the largest construction market valued at $1.8 trillion in 2020. This was followed by the United States at $900 billion and India at $380 billion. The Middle East, Japan and Europe are other major regional markets witnessing active building construction. Africa and South America are emerging as potential future markets.
Key Industry Players
Some of the major companies operating in the construction materials industry across cement, aggregates, ceramics, glass and wood products include LafargeHolcim, Cemex, CRH, Saint Gobain, Heidelberg Cement, China National Building Material Company (CNBM), China Lesso Group Holdings, Compagnie de Saint-Gobain S.A., Atlas Concrete, Boral Limited, UltraTech Cement, Vulcan Materials Company, Martin Marietta Materials, Anhui Conch Cement, Eagle Materials and Cornerstone Building Brands.
The industry is highly competitive with players focused on enhancing their materials production capacities, distribution network, and service capabilities to drive market share gains. Inorganic growth through acquisitions is also a key strategy to expand into new geographies and product lines.
Industry Drivers and Trends
Rising global population, rapid urbanization, higher infrastructure investment and growth of residential & commercial real estate sectors are the fundamental demand drivers for construction materials. Developing economies with higher GDP and per capita income growth are witnessing faster growth compared to their developed counterparts.
Increased use of alternative and green building materials is also becoming a noticeable trend. There is greater adoption of materials like engineered wood, recycled glass and plastic, composites and sustainable natural materials. Technology integration is also picking up pace with solutions like prefab construction, 3D printing of buildings and smarter building management systems.
Overall, the construction materials industry is positioned on solid long-term growth foundations linked to structural economic development. It is expected to offer steady growth opportunities for both existing players and new entrants over the next decade. The key challenges would involve managing supply-demand balance, raw material costs and inventories in turbulent economic conditions. Companies would need robust risk management strategies to handle market volatility. But prudent investors can benefit from the sector’s immense potential.