The last few months have been difficult for all sides of the asphalt business, including producers, contractors and customers, even the Colorado Department of Transportation.
Both the drastic increase in asphalt prices this summer and SIM Materials filing Chapter 11 bankruptcy has put unexpected delays on several roadway projects.
SIM Materials is a middle-man company that added polymer, a strengthening and binding agent, to asphalt that is used on high-traffic roads, mostly highways, to make the road last longer. Asphalt companies went to SIM to get this super-durable additive. With the demise of SIM, asphalt companies felt the effects, and in turn, so did everyone else.
“It affected us because of the fact that we used their quoted prices in order to get a lot of the work we got. Then we had to go out to the market and try to find other sources, but the market prices have changed drastically so we had to make adjustments to our prices,” said Jeff Keller, owner of Asphalt Paving Co. in Golden, which has contracts to do some of the highway construction in the area this summer.
He said his company only had to delay one project until next year because it required polymer.
Bob Wilson, Public Relations Manager for CDOT, said there are some projects where they changed the mixture and are using asphalt without the polymer in order to get the projects done. Wilson said they originally anticipated delays, but there is no longer an issue.
Mindy Crane, also a CDOT Public Relations Manager, said that there haven’t been any projects cancelled, but some have been delayed.
“Some are temporarily shut down, but most are proceeding as normal,” she said.
One project that was on hold is located at Highway 72 at 64th and 86th avenues.
“Other local projects are moving forward as scheduled and haven’t had impacts, mainly because they don’t use that type of asphalt (with polymer additive),” Crane said.
“Most of the areas around (Jefferson County) are bridge-replacement projects so they use concrete,” she said.
“This may result in reduction in performance, but that was the trade-off for getting it done,” said Tom Peterson, Executive Director of Colorado Asphalt Pavement Association, on the use of asphalt sans polymer for many recent highway projects.
Additionally, there was a shortage in asphalt due to reduced production by crude oil refiners. According to Peterson, crude oil refineries have begun to upgrade their facilities to make less liquid asphalt and more of other fuel products, which are more profitable.
Because of the shift in supply and demand, in addition to the increase in crude oil prices, asphalt prices went from $350 to $600 a ton of liquid asphalt (the petroleum product, without rock and sand added) over the summer months alone. This meant that the price originally agreed upon for many projects increased between the time the estimate was given and the time that the project was completed.
“All of the suppliers have put us on monthly rack pricing, so prices change every month, so we have to go to our customers with the same kind of requirement,” Keller said.
In previous years, the price of asphalt remained stable through an entire job.
Overall, the impact has been to price alone. Peterson said drivers would not feel or see any difference when driving on the polymer-less pavement. The pavement may just not last as long.
As for how local asphalt companies are fairing with both hurdles, “We are fortunate that we have the work that we’ve got and we are progressing. This year will slow down and stop earlier than we are accustomed to,” Keller said.