Clay

Clay blocks are blocks crafted from four balls of clay, meaning that you can make them in your inventory. They look like gray sand and are typically found in groups of varying number by a source of water, usually the ocean. Another thing to note about clay is that it is always found at the surface, it will not be hidden under a sand bar.

They are best gathered using a shovel, however any tool can be used successfully. Destroying them yields 4 balls of clay.

Smelting clay produces bricks, which in turn can later be made into  brick blocks.