Katrina boosts prices for certain building materials

October 01, 2005 |

Hurricane Katrina abruptly changed construction materials price trends. Before the hurricane, most material prices were steady to slightly lower during the summer months, except for concrete, gypsum products, and aggregates (production capacity was insufficient to accommodate the normal seasonal rise in demand for these products). Steel prices, while still up 50%, were slipping as suppliers discounted to cut inventory. Plastic construction products suppliers had absorbed the 6% rise in natural gas feedstock prices over the prior year.

Cement, gypsum, plywood, and panel prices will rise significantly and almost certainly erratically in September and October, due to the temporary loss of import supplies and Gulf region production and outbound shipments.

Normally, suppliers would rebuild inventories during the slower winter season. But demand will spike higher this winter because these products will be heavily used in the initial repair and rebuilding effort. The added demand for rebuilding New Orleans is not likely to be enough to cause large and sustained price rises for other construction materials.

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