Construction materials pricing remains weak

August 11, 2010

Construction materials prices increased at a slim 2.5% annual pace in the three months ending in February. This is the consequence of the small decline in overall construction spending since last May as well as the flight of international financial speculators from the oil and copper markets.

However, price increases have been slightly higher in the last few months at the commodity level, including metals, oil and aggregates, suggesting that pricing will strengthen for products delivered to the job site in the spring. Some of the quicker price gains are in place already because commodity prices have increased significantly since the last price survey in the second week of February.

Reed Construction Data expects price increases in 2007-08 to be clearly lower than in 2004-06 but still higher than inflation in the rest of the economy. This anticipated slowing in inflation is primarily due to the decline in inflation-adjusted construction spending in 2006-07 and the improved reserve position of oil suppliers so that any supply disruptions can be accommodated more with inventory and less with price rationing.

The significant price changes expected during the spring include brief, modest surges in steel and diesel prices. Spring is the upside of the frequent inventory cycles in the steel market. Price rises will be much less than the steel mills try to obtain.The spring price rises for diesel and other oil-based products is a hurricane aftershock. Refiners finally feel comfortable catching up with preventive maintenance shutdowns deferred last spring when they had to operate at full capacity to offset their hurricane shutdowns.

Cement and concrete prices have declined recently both because of the housing slowdown and the delay of civil projects waiting for scheduled federal funds or redesigns to keep costs within budgets. This weakness will persist into the spring but probably not longer.


Construction Materials

Price Index % Change in…

3 years

12 months

3 months

1 month

Architectural Metalwork

33.2

5.8

2.8

0.4

Asphalt Roofing

29.2

3.2

1.2

-1.4

Builders' Hardware

14.1

7.1

1.4

0.8

Building Brick

18.8

4.3

0.1

-0.2

Cement

32.5

4.4

-1.7

-2.1

Ceramic Tile

1.5

-3.0

-2.2

-2.2

Concrete Block & Brick

24.0

4.6

1.2

0.7

Concrete Pipe

15.5

1.7

-0.4

-0.3

Construction Sand, Gravel & Crushed Stone

26.3

10.0

3.9

1.9

Diesel Fuel

86.6

-1.2

-1.9

7.0

Engineered Wood Products

7.9

-8.1

-1.9

-0.7

Extruded Aluminum rod, bar and other shapes

n/a

9.3

1.8

0.2

Fabricated Building Steel

23.4

2.0

0.6

0.0

Flat Glass

4.2

1.4

0.2

-0.1

Gypsum Products

42.2

-3.6

-4.4

-2.4

Hardwood Lumber

-1.9

-1.9

-1.0

-0.5

Hot rolled bars, plates & structural shapes

51.6

8.9

-0.6

2.4

Insulation Materials

11.6

-1.5

0.6

-0.1

Metal Plumbing Fixtures

19.5

8.9

3.4

3.1

Millwork (window,door, cabinet)

8.5

2.3

1.1

0.5

Nonferrous Pipe and Tube

n/a

20.2

-12.3

-3.3

Paint

21.7

6.3

0.7

0.2

Plastic Construction Products

27.8

-3.5

-1.2

0.3

Plastic Resins & Materials

26.6

-7.4

-3.7

-0.6

Precast Concrete Products

18.2

5.2

2.4

0.7

Ready Mix Concrete

33.4

7.2

1.7

0.4

Sheet Metal Products

20.0

6.2

-0.1

0.1

Softwood Lumber

-8.9

-16.0

6.0

0.8

Softwood Plywood

-30.8

-11.4

5.8

1.5

Steel Pipe and Tube

59.7

3.8

-3.3

-1.9

Vitreous Plumbing Fixtures

1.8

0.2

0.1

-0.1

Wood Kitchen Cabinets

7.7

2.8

1.7

1.1

Summary

Construction Materials (commodity level)

18.1

2.5

0.9

0.4

Inputs to Construction Industries

21.4

3.7

0.6

0.6

Inputs to NR Construction

23.9

4.0

0.6

0.7

Inputs to MF Construction

21.4

4.3

1.0

0.6

Source: Producer Price Index. Bureau of Labor Statistics

Source: US Department of Labor, Federal

Reserve Board, Census Bureau
         
 

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