Construction materials prices drop slightly in April
The construction materials price index for nonresidential buildings fell 0.3% in April extending the decline since the September index peak to 13.1%. Prices for the mix of materials used in nonresidential construction prices are back to the December 2007 level before the 14% jump in prices from March through September.
The materials price index is expected to decline slowly for a few more months but be rising modestly again by the end of the year and rising more quickly next year, perhaps up 4-5% from the 2009 average.
April’s price drop was led by structural steel (7.3%) and plywood (-3.3%). The only significant April price increases were for diesel (20.5%) and nonferrous pipe and tube (20.9%) which had both declined in March. Rising scrap and ore prices mean rising nonferrous product prices for at least several months. The Energy Department reports that diesel pump prices were unchanged from the April to the May price survey week.
More cuts are immediately ahead for steel products. Scrap prices fell 12% in April and have fallen further since the survey week. Steel buyers have reported dropping spot prices for many products in the last few weeks.
U.S. construction supplies production is declining faster than construction activity, signaling that aggressive inventory reduction is under way. This will contribute to weak pricing well into the year.
Price trends vary widely by region depending on the level and mix of construction work in each market. Price level and trend information for more than 300 markets is available from RSMeans at www.reedconstructiondata.com/construction-costs/us/