Construction Material Prices Fall in July After 2 Month Rise
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RSS FeedThe construction materials price index declined 0.6% in July after rising 1.6% over the previous two months. The price changes in the last few months are just short term noise. Small monthly gains or losses are expected for a few more months before a sustained price rise begins. The major price declines in July were 9.0% for diesel fuel, 1.9% for structural steel and 0.5% for ready-mix concrete. Softwood lumber jumped 6.7% and aluminum increased 4.6%. The spike in lumber prices is inconsistent with the trend in the framing lumber index reported by Random Lengths and could be revised or reversed. The July drop in diesel fuel prices will be substantially, possibly totally reversed in August. Both crude oil and diesel prices in early August were above the highest level reached in June.
The expected resumption of rising construction materials costs was previewed in July with the 4.0% rise in plastic resin prices adjusting to the doubling of crude oil prices earlier this year. This has not yet reached pricing for construction plastics which fell 0.2% in July. Steel scrap prices jumped 20% in July. Monthly changes on this scale are frequent. But the recent rise in machinery and vehicle production worldwide is likely to keep scrap prices on an upward trend. Iron ore prices fell 8.3% after negotiations between major suppliers and buyers but it is not likely real acquisition prices fell this much in this secretive market.
US construction supplies production is declining faster than construction activity, signaling that aggressive inventory reduction is underway. 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.
Construction Materials Inflation – August 2009 | ||||
| Percent Change in… | ||||
| 1 month | 3 months | 12 months | 3 years | |
| Construction Commodities | ||||
| Dimension Stone | 1.2 | 0.3 | 4.9 | 10.2 |
| Cement | 0.3 | -1.0 | -0.3 | 3.8 |
| Asphalt Paving Mixtures and Blocks | 2.1 | 8.9 | -41.8 | 8.4 |
| Construction Sand, Gravel & Crushed Stone | -0.4 | -0.3 | 3.2 | 19.2 |
| Softwood Plywood | 1.5 | 4.4 | -11.7 | -2.8 |
| Hardwood Lumber | 1.0 | 1.2 | -7.4 | -14.1 |
| Softwood Lumber | 2.2 | 10.9 | -9.0 | -16.6 |
| Other Commodities | ||||
| Industrial Natural Gas | -1.3 | 0.6 | -34.6 | -13.9 |
| Plastic Resins & Materials | -1.2 | 3.5 | -19.6 | -3.1 |
| Insulation Materials | -1.0 | -1.5 | -0.9 | -6.3 |
| Iron & Steel Scrap | 13.5 | 38.5 | -49.8 | 20.9 |
| Iron Ore | 0.0 | -8.3 | -3.3 | 3.9 |
| Copper Ores | 3.9 | 14.3 | -36.0 | -29.3 |
| Copper Base Scrap | 16.6 | 25.7 | -19.9 | -0.6 |
| Manufactured Materials | ||||
| Gypsum Products | -0.8 | -2.4 | -3.7 | -26.6 |
| Diesel Fuel | 16.7 | 21.6 | -41.5 | -20.1 |
| Asphalt Roofing | -5.0 | -1.3 | 7.9 | 52.7 |
| Paint | 0.0 | 0.0 | 5.1 | 22.1 |
| Plastic Construction Products | -0.1 | -0.4 | -2.3 | 0.7 |
| Vitreous Plumbing Fixtures | 0.0 | 0.0 | 2.5 | -2.0 |
| Ceramic Tile | -0.7 | -1.7 | -1.7 | 0.9 |
| Flat Glass | -1.2 | -2.0 | -4.0 | -0.4 |
| Fabricated Building Steel | 0.6 | -2.0 | -11.4 | 3.6 |
| Hot rolled bars, plates & structural shapes | 4.7 | 9.2 | -36.4 | -1.9 |
| Extruded Aluminum rod, bar and other shapes | 1.0 | 4.8 | -22.2 | -16.2 |
| Architectural Metalwork | -0.2 | -1.2 | -2.4 | 18.5 |
| Metal Plumbing Fixtures | -0.1 | -0.1 | -0.3 | 9.3 |
| Builders' Hardware | 0.8 | 1.1 | -4.8 | 11.9 |
| Sheet Metal Products | -0.8 | -1.1 | -7.6 | 1.8 |
| Steel Pipe and Tube | 2.8 | -0.9 | -25.8 | 1.6 |
| Nonferrous Pipe and Tube | 10.6 | 20.7 | -13.2 | -4.5 |
| Building Brick | 0.3 | 0.3 | -0.5 | 0.3 |
| Ready Mix Concrete | -0.9 | -0.8 | 1.9 | 7.1 |
| Concrete Block & Brick | 0.0 | 0.8 | 1.7 | 8.2 |
| Prestressed Concrete | -0.6 | -6.1 | -14.3 | -6.8 |
| Precast Concrete Products | -0.1 | -0.3 | 0.9 | 11.8 |
| Concrete Pipe | -1.4 | -2.3 | -3.0 | 11.5 |
| Wood Kitchen Cabinets | 0.0 | 0.1 | 2.0 | 6.1 |
| Millwork (window,door, cabinet) | 0.0 | -0.1 | 1.6 | 4.1 |
| Engineered Wood Products | 0.4 | 0.5 | -5.6 | -12.8 |
| Laminated Plastics | 0.0 | 0.1 | -1.6 | 4.9 |
| Assembled Equipment | ||||
| Hand and Edge tools | -0.1 | 0.0 | 2.8 | 10.9 |
| Power Hand Tools | 1.7 | -0.5 | -0.1 | 4.0 |
| Appliances | 0.1 | -0.7 | 3.5 | 5.9 |
| Furnaces | 0.1 | -0.2 | 1.1 | 11.6 |
| Construction Machinery | -0.6 | -0.2 | 2.6 | 8.7 |
| Construction Machinery Rental (incl. oilfield equip.) | -1.7 | -1.6 | -1.1 | 0.6 |
| Trucks over 14,000 Ibs. GVW | 0.5 | 1.0 | 5.0 | 13.2 |
| Metal Doors, Sash and Trim | 0.0 | -1.8 | -1.9 | 6.8 |
| Summary | ||||
| Construction Materials (commodity level) | 1.1 | 1.3 | -9.0 | 3.0 |
| Inputs to Construction Industries | 1.1 | 1.6 | -7.5 | 5.7 |
| Inputs to NR Construction | 2.2 | 3.1 | -8.9 | 7.1 |
| Inputs to SF Construction | 0.8 | 0.9 | -3.8 | 5.8 |
| Inputs to MF Construction | 0.8 | 0.9 | -5.7 | 4.8 |
| Inputs to Highway & Street Const. | 1.4 | 3.1 | -12.8 | 8.0 |
| Inputs to Other Heavy Construction (indexes incl. instalation and overhead) |
1.3 | 1.9 | -12.1 | 4.9 |
| New Warehouse Building Construction | 0.1 | -2.4 | 1.4 | 19.7 |
| New School Construction | -0.5 | -2.7 | 7.2 | 15.4 |
| New Office Construction | 0.2 | -2.1 | 3.1 | |
| Production Index: Construction Supplies | -0.1 | -0.6 | -21.0 | -26.0 |
| Retail Sales: Building & Equipment Supplies | -1.2 | -3.6 | -13.3 | -16.9 |
Source: Producer Price Index, Bureau of Labor Statistics, | ||||
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Construction materials prices continued to move downward in July falling 0.6 percent, according to the August 18th producer price index (PPI) report by the U.S. Labor Department. Overall, construction materials prices are 8.6 percent lower than one year ago. (See what this means below)
Prices for fabricated structural metal products slipped for the tenth straight month, down 1.0 percent for July and 6.9 percent lower from last July. Nonferrous wire and cable producer prices decreased by 0.8 percent in July and are down 16.9 percent year-over-year. Producer prices for prepared asphalt and tar roofing and siding products decreased 1.6 percent from last month but are still up 23.5 percent from July 2008.
Softwood lumber prices jumped 6.7 percent in July but are down 10.1 percent on a year-over-year basis. Plumbing fixtures and fittings prices remain unchanged on a monthly basis and are up just 0.5 percent from a year ago.
Crude energy prices decreased 6.2 percent last month, led by a 15.9 percent decrease in crude petroleum prices. Finished energy goods prices fell 2.4 percent in July as gasoline prices dropped 10.2 percent for the month. Overall, wholesale prices inched downward 0.9 percent in July following two consecutive months of increases. That means, they don’t have to use any instant loans.