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Weak Sales Push September Construction Materials Prices Down 0.1%

0 1354 Market Intelligence

Prices for construction materials priced in the domestic market fell enough to offset rising prices for materials priced in international markets. Prices were 3.4% lower than in august for softwood plywood, 2.6% lower for gypsum products, 1.9% for asphalt roofing, 1.3% lower for softwood lumber and smaller price declines for concrete products. However, prices rose in September 9.6% for nonferrous pipe and tube, 3.4% for extruded aluminum and 1.4% for structural steel which are all priced in international markets, says Reed Construction Data chief economist Jim Haughey.

Prices for construction materials priced in the domestic market fell enough to offset rising prices for materials priced in international markets. Prices were 3.4% lower than in august for softwood plywood, 2.6% lower for gypsum products, 1.9% for asphalt roofing, 1.3% lower for softwood lumber and smaller price declines for concrete products. However, prices rose in September 9.6% for nonferrous pipe and tube, 3.4% for extruded aluminum and 1.4% for structural steel which are all priced in international markets.

Diesel fuel prices moved counter to this trend slipping 2.6% in September but the resumed decline in the $US has already pushed prices up $0.12/ gal. by the October survey week. The disparity between domestic and imported price trends will continue through the year when foreign economic growth remains stronger than in the US. The expected trend is for the overall construction materials price index to be flat to slightly up, depending on the volatile monthly changes in diesel prices.

Late 2010 is a brief window of relatively low construction materials price inflation due to the slowdown in US GDP growth after the initial expansion and the modest inventory de-stocking it this set off. The outlook for 2011-12 in a strong economy and construction market is for materials price inflation to be 6% or higher, about triple the inflation pace in the rest of the economy. The turnabout from steady or falling prices for domestic commodities and materials to slowly rising prices should come in about 3-4 months.

There were two significant September price increases for domestically priced materials that were counter to the declining trend for this group of materials. Flat glass prices increased 2.2% but this does not indicate a change in the typically steady glass price. Also, rental rates for construction equipment increased 1.8% and are 3.9% higher in the last three months while the purchase price of construction equipment was only up 0.6%. No quick reversal is expected. Equipment rental houses have gotten steady prices increases on their resale of equipment for about six months. Equipment manufacturers have experienced a surge in orders for almost a year and are building a backlog of unfilled orders.

US Construction-Related Price Indexes – September 2010

  Percent Change versus...
  3 years
ago
year
ago
3 months
ago
previous
month
Construction Commodities  
Dimension Stone 11.0 0.9 -0.2 0.0
Cement -9.5 -6.9 -0.8 -0.6
Asphalt Paving Mixtures and Blocks 35.1 17.2 -12.9 -8.0
Construction Sand, Gravel & Crushed Stone 12.6 2.3 0.7 0.6
Softwood Plywood -7.2 7.5 -10.0 -3.4
Hardwood Lumber -0.6 11.4 -0.2 -0.8
Softwood Lumber -9.8 5.2 -7.5 -1.3
Other Commodities  
Industrial Natural Gas -12.3 2.2 0.2 -4.1
Plastic Resins & Materials 6.3 5.3 -1.3 -1.7
Insulation Materials 1.1 3.2 0.6 -0.3
Iron & Steel Scrap 34.5 31.4 2.2 5.1
Iron Ore 15.7 6.8 7.4 0.0
Copper Ores -7.8 13.5 15.5 14.7
Copper Base Scrap 10.5 17.7 13.6 2.3
Manufactured Materials  
Gypsum Products -3.1 -1.6 -4.9 -2.6
Diesel Fuel -7.6 17.7 2.6 -1.5
Asphalt Roofing 59.6 5.2 1.0 -1.9
Paint 12.4 -3.2 0.0 0.0
Plastic Construction Products 6.1 1.3 -1.0 -0.2
Vitreous Plumbing Fixtures -2.1 2.0 0.1 0.0
Ceramic Tile 2.0 2.1 0.7 0.8
Flat Glass -1.9 -1.1 2.5 2.2
Fabricated Building Steel -1.7 -0.9 0.5 0.2
Hot rolled bars, plates & structural shapes 2.7 11.7 -4.1 1.4
Extruded Aluminum rod, bar and other shapes -8.4 6.0 2.7 3.4
Architectural Metalwork 17.2 2.5 0.0 0.8
Metal Plumbing Fixtures 4.5 1.6 0.3 0.0
Builders/' Hardware 10.4 2.5 -0.4 -0.4
Sheet Metal Products 5.9 3.9 0.7 0.4
Steel Pipe and Tube 22.3 17.9 0.1 0.1
Nonferrous Pipe and Tube 7.9 12.1 16.8 9.6
Building Brick -1.4 -0.2 -0.7 -0.3
Ready Mix Concrete 2.5 -1.5 0.5 0.1
Concrete Block & Brick 2.9 -1.7 -1.1 -0.6
Prestressed Concrete -4.8 1.7 -0.4 -0.7
Precast Concrete Products 6.6 1.3 -0.4 -0.4
Concrete Pipe 5.2 -3.5 0.5 0.1
Wood Kitchen Cabinets 4.3 0.3 0.4 0.2
Millwork (window, door, cabinet) 3.7 0.5 0.3 0.1
Engineered Wood Products -1.3 2.0 -1.8 -0.5
Laminated Plastics 5.8 -0.9 -0.1 0.0
Assembled Equipment  
Hand and Edge tools 7.5 -0.8 0.0 0.2
Power Hand Tools 2.5 0.6 0.3 0.0
Appliances 4.7 -0.1 -0.3 -0.1
Furnaces 4.1 0.6 1.0 0.5
Construction Machinery 6.9 1.1 0.6 0.4
Construction Machinery Rental
   (includes oilfield equipment)
-3.3 -1.5 3.9 1.8
Trucks over 14,000 Ibs. GVW 11.0 3.3 0.1 0.0
Metal Doors, Sash and Trim 5.1 0.6 -0.1 0.1
Summary  
Construction Materials (commodity level) 0.1 -1.5 2.5 5.8
Inputs to Construction -0.1 -1.0 4.0 7.8
Inputs to Residential Construction -0.1 -0.2 3.4 7.6
Inputs to Commercial Construction -0.1 -0.1 na na
Inputs to Industrial Construction 0.1 0.4 na na
Inputs to Heavy Construction
   (indexes incl. installation and overhead)
0.0 0.0 0.0 0.0
New Warehouse Building Construction 0.0 0.2 -0.9 3.4
New School Building Construction -0.1 -0.2 1.7 10.6
New Office Construction 0.0 0.3 -0.1 4.6
Production Index: Construction Supplies -0.8 -0.3 5.2 -20.8
Retail Sales: Building & Equipment Supplies 0.6 1.2 6.4 -10.9

Source: Producer Price Index, Bureau of Labor Statistics,
US Department of Labor, Federal Reserve Board, Census Bureau

by Jim Haughey

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