Tags: Trump Administration | building materials stocks | trump | wall | mexico

Building-Materials Stocks Rise on Trump Plan for Mexico Wall

Image: Building-Materials Stocks Rise on Trump Plan for Mexico Wall

(AP/Andrew Harknik)

Wednesday, 25 Jan 2017 12:34 PM

Building-materials companies rose after President Donald Trump reiterated his plan to build a wall along the Mexican border, potentially fueling increased demand for cement, concrete and crushed stone.

Vulcan Materials Co., the biggest U.S. sand and gravel supplier by market value, advanced 2.6 percent to $135.84 at 11:01 a.m. in New York. Cement makers Martin Marietta Materials Inc. and Eagle Materials Inc. also rose, extending gains that began after Trump’s election. Germany’s HeidelbergCement AG, which has said it would benefit from a border wall, surged the most in two months.

Trump tweeted Tuesday “Among many other things, we will build the wall!” ahead of his scheduled visit to the Department of Homeland Security, the federal agency that has primary jurisdiction over securing the border. A wall between the U.S. and Mexico was one of the hallmarks of his presidential run along with improving infrastructure. On the campaign trail, Trump proposed to ramp up spending on construction.

“What we heard yesterday and today is that he is going to deliver,” Commerzbank AG analyst Norbert Kretlow said by phone. “The possibility for infrastructure investments is now a lot higher.”

Cemex Prospects

One beneficiary could be a Mexican company: Cemex SAB. The U.S. is Cemex’s biggest market, representing a fifth of its revenue last quarter, and the company has cement operations on both sides of the border. A July report from Sanford C. Bernstein & Co. pegged the cost of a wall at $15 billion or more, requiring about 7 million cubic meters of concrete.

Cemex’s Mexican shares, which have risen about 17 percent since Trump’s election, were little-changed on Wednesday.

The cost of the wall could vary widely depending on its size and the materials used, said Garik Shmois, an analyst at Longbow Research who covers Martin Marietta, Vulcan Materials Co., Cemex and other building materials makers. At the midpoint of Shmois’s estimate, the wall would use about $1.2 billion of cement, concrete and aggregates.

“So many companies have exposure around the border that it would be divided up fairly evenly,” said Shmois, who estimates that about two-thirds of the potential benefit from Trump’s total infrastructure plans is already priced into material-suppliers’ shares. “No one company is going to be disproportionately impacted by this.”

Other Beneficiaries

Because moving all that gravel requires heavy machinery, shares of equipment-makers have risen as well. Caterpillar Inc., the biggest manufacturer of construction and mining equipment, has climbed 16 percent since the election and gained 1.9 percent as of 11 a.m. in New York. Titan International Inc., whose tires keep heavy equipment rolling, rose 5.2 percent as of 11 a.m.

HeidelbergCement Chief Executive Officer Bernd Scheifele has said the company would be well positioned in Texas and Arizona to supply cement for a border wall. The shares rose 4.5 percent to 91.50 euros in Frankfurt, the biggest gain since Nov. 9. Swiss rival LafargeHolcim Ltd. climbed 3.1 percent to 54.75 Swiss francs.

“Whether it’s money flowing into infrastructure or the wall, they need cement, and they need the building materials that these guys are providing,” said Phil Rosenberg, an analyst with Bernstein. “Any incremental demand for building materials would be very positive for these.”

 

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Building-materials companies rose after President Donald Trump reiterated his plan to build a wall along the Mexican border, potentially fueling increased demand for cement, concrete and crushed stone.Vulcan Materials Co., the biggest U.S. sand and gravel supplier by market...
building materials stocks, trump, wall, mexico
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2017-34-25
Wednesday, 25 Jan 2017 12:34 PM
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