The surge in construction materials prices continued in April with the price index up 1.1% from March. Plywood prices jumped 15.5% to the highest level since 2005. Softwood lumber prices rose 4.5% to a three year high level. Spot lumber prices have dropped 10% since the April price survey week. The spring price surge was due to the slow adjustment of mills to an increase in demand by contractors. A partial rollback of the recent price jump is expected in the next few months. Nonetheless, the price index for single family construction materials spiked 5.1% in April causing a temporary reduction homebuilder margins.
Metal prices also contributed to the April price surge. Structural steel prices were up 6.3%, steel pipe prices 5.8%, aluminum prices 2.4% and non-ferrous pipe prices 1.3%. Scrap and ore prices continued to rise assuring more metal product price rises ahead. Ore prices were 19.9% higher for copper and 1.3% higher for iron, the first rise in nine months. Iron ore prices are soaring as much as 100% outside the US with some of this rise certain to spill into the US market later this year.
Gypsum product prices were 2.4% higher, much less than the price increased posted by Gypsum product suppliers. More price increases are ahead in this market with relatively few major suppliers. Cement prices continued to weaken falling 1.7% from March. Cement product prices also slipped slightly again in April. Higher usage as construction rises will stop the erosion in concrete prices by yearend.
Diesel prices rose a further 6.5% in April but prices have been stable since the April survey week so no price increased is expected in May. With crude oil prices dropping to $70 in Mid-May, diesel prices may slip slightly lower in the June price report.
The only significant price drop in April was the 2.8% decline in flat glass prices. This is not a new trend in this usually stable market. It reflects the sharp drop in industrial natural gas prices during an unusually warm winter.
The price indexes for assembled equipment (construction equipment and tools as well as building systems) continue to trend flat to slightly down. This reflects overall inflation in the economy which remains barely above zero. The April Producer Price Index increased only 0.1%.
The overall construction materials price index is 6.2% above a year ago but prices have increased at nearly twice that pace in the last four months. The outlook is for the price index to finish 2010 at about 7% above the end of 2009 level. By contrast, overall prices in the economy will only be 1-2% higher by yearend.
US Construction-Related Price Indexes – April 2010 |
| | Percent Change versus... |
| | 3 years
ago | year
ago | 3 months
ago | previous
month |
| Construction Commodities | |
| Dimension Stone | 10.8 | 2.9 | -0.3 | -1.8 |
| Cement | -6.6 | -6.6 | -2.5 | -1.7 |
| Asphalt Paving Mixtures and Blocks | 69.6 | 43.2 | 17.2 | 3.8 |
| Construction Sand, Gravel & Crushed Stone | 13.0 | 0.5 | 0.3 | 0.2 |
| Softwood Plywood | 14.5 | 31.2 | 26.7 | 15.5 |
| Hardwood Lumber | -4.0 | 10.4 | 4.5 | 1.4 |
| Softwood Lumber | 0.3 | 27.6 | 15.0 | 4.5 |
| Other Commodities | |
| Industrial Natural Gas | -19.6 | -5.7 | -8.3 | -5.8 |
| Plastic Resins & Materials | 19.8 | 21.4 | 15.6 | 11.4 |
| Insulation Materials | -0.8 | 0.5 | 2.0 | -0.9 |
| Iron & Steel Scrap | 34.6 | 152.9 | 25.1 | 7.8 |
| Iron Ore | 9.9 | -7.5 | 1.4 | 1.4 |
| Copper Ores | 6.9 | 94.0 | 18.5 | 19.9 |
| Copper Base Scrap | 21.0 | 70.6 | 8.7 | 6.4 |
| Manufactured Materials | |
| Gypsum Products | -18.5 | -7.1 | 3.6 | 2.4 |
| Diesel Fuel | 0.8 | 50.1 | 5.0 | 6.5 |
| Asphalt Roofing | 54.1 | 2.1 | -0.3 | -0.6 |
| Paint | 12.3 | -3.8 | -3.3 | 0.0 |
| Plastic Construction Products | 7.4 | 3.3 | 3.4 | 0.4 |
| Vitreous Plumbing Fixtures | -2.0 | 2.1 | 2.1 | 1.9 |
| Ceramic Tile | 3.0 | -1.4 | 0.4 | 1.2 |
| Flat Glass | -4.4 | -5.4 | -1.7 | -2.8 |
| Fabricated Building Steel | 1.2 | -4.8 | 1.5 | 0.5 |
| Hot rolled bars, plates & structural shapes | 2.7 | 23.3 | 12.0 | 6.3 |
| Extruded Aluminum rod, bar and other shapes | -12.1 | 13.0 | 0.8 | 2.4 |
| Architectural Metalwork | 17.4 | -1.0 | 1.0 | 1.0 |
| Metal Plumbing Fixtures | 4.8 | 0.7 | 0.1 | 0.3 |
| Builders' Hardware | 10.5 | -0.7 | 1.2 | 0.8 |
| Sheet Metal Products | 4.4 | 0.4 | 1.3 | 0.4 |
| Steel Pipe and Tube | 18.1 | 13.5 | 11.2 | 5.8 |
| Nonferrous Pipe and Tube | 6.2 | 36.6 | 0.5 | 1.3 |
| Building Brick | -1.8 | -1.1 | -1.1 | -0.7 |
| Ready Mix Concrete | 2.1 | -2.8 | -0.8 | -0.7 |
| Concrete Block & Brick | 4.7 | -0.5 | -0.3 | -0.5 |
| Prestressed Concrete | -4.3 | -3.6 | 4.4 | -0.6 |
| Precast Concrete Products | 8.5 | 1.7 | 0.8 | -0.1 |
| Concrete Pipe | 7.5 | -6.0 | 0.1 | 0.0 |
| Wood Kitchen Cabinets | 3.5 | -0.8 | -0.1 | 0.1 |
| Millwork (window, door, cabinet) | 3.6 | 0.1 | 1.2 | 0.5 |
| Engineered Wood Products | -2.2 | 4.5 | 4.5 | 0.2 |
| Laminated Plastics | 4.7 | -1.5 | 0.0 | 0.0 |
| Assembled Equipment | |
| Hand and Edge tools | 8.0 | -0.7 | -0.8 | 0.4 |
| Power Hand Tools | 2.8 | -0.3 | 0.1 | 0.2 |
| Appliances | 5.0 | -1.5 | 0.7 | 1.9 |
| Furnaces | 3.4 | -1.0 | -0.4 | -1.0 |
| Construction Machinery | 7.0 | 0.0 | 0.2 | 0.3 |
Construction Machinery Rental
(includes oilfield equipment) | -4.9 | -4.4 | -2.9 | -2.6 |
| Trucks over 14,000 Ibs. GVW | 8.1 | 2.2 | 0.0 | -0.1 |
| Metal Doors, Sash and Trim | 5.5 | -1.3 | 0.5 | 0.2 |
| Summary | |
| Construction Materials (commodity level) | 6.9 | 5.1 | 3.8 | 1.3 |
| Inputs to Construction Industries | 9.1 | 6.2 | 2.4 | 1.1 |
| Inputs to NR Construction | 14.1 | 11.5 | 2.8 | 1.5 |
| Inputs to SF Construction | 12.8 | 8.6 | 6.5 | 5.1 |
| Inputs to MF Construction | 6.9 | 4.4 | 2.2 | 0.9 |
| Inputs to Highway & Street Const. | 11.7 | 9.5 | 2.3 | 1.1 |
Inputs to Other Heavy Construction
(indexes incl. installation and overhead) | 8.4 | 7.0 | 2.3 | 1.1 |
| New Warehouse Building Construction | 4.8 | -5.1 | -0.1 | 0.2 |
| New School Construction | 12.5 | -1.5 | 0.5 | 0.7 |
| New Office Construction | | -4.2 | -0.3 | -0.1 |
| Production Index: Construction Supplies | -21.6 | 2.9 | 4.9 | 2.8 |
| Retail Sales: Building & Equipment Supplies | -4.3 | 11.9 | 15.2 | 6.9 |
Source: Producer Price Index, Bureau of Labor Statistics,
US Department of Labor, Federal Reserve Board, Census Bureau |