Construction materials price index yields some surprises for school construction

LET US NOT FORGET JOHN HODGE’S STATEMENT ABOUT CONTRACTORS ARE ‘HUNGRY FOR WORK’ WHEN IT CAME TO THE SCHOOL PROJECT.

SEE THE PROJECTED COST INCREASES FOR NEW SCHOOLS IN 12 AND 36 MONTHS AT THE BOTTOM OF THE COLUMN. THERE ARE JUST SOME THINGS THAT CAN’T BE CONTROLLED.

SO, YOU GOTTA ASK YOURSELF A FEW QUESTIONS ... IF YOU DON'T KNOW THESE QUESTIONS  ... THEN STOP READING THIS BLOG!!!

The construction materials price index fell 0.4% in April extending the decline since the September peak to 10.0%. The 2008 spike in prices has now been more than reversed. The materials price index stands at 3.6% lower than a year ago. The 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 asphalt roofing (-11.3%), steel pipe & tube (-7.9%), structural steel (7.3%) and plywood (-3.3%). The only significant April price increases were for diesel (20.5%) and nonferrous pipe & 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.

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 – April 2009                                                           Percent Change in… 1 month 3 months 12 months 3 years Construction Commodities Dimension Stone 1.7 1.7 6.4 7.5 Cement 0.8 -0.2 0.0 6.1 Asphalt Paving Mixtures and Blocks 5.0 9.0 -5.9 32.7 Construction Sand, Gravel & Crushed Stone 0.5 1.4 5.5 23.1 Softwood Plywood -3.3 -4.9 -12.7 -21.1 Hardwood Lumber -0.7 -4.5 -10.5 -14.0 Softwood Lumber 1.6 -2.6 -10.7 -32.5 Other Commodities Industrial Natural Gas -7.4 -17.2 -23.8 -14.6 Plastic Resins & Materials -2.2 1.3 -11.0 -4.7 Insulation Materials -0.1 0.8 2.8 -4.5 Iron & Steel Scrap -11.7 -21.1 -66.2 -30.4 Iron Ore 0.1 1.8 5.4 12.9 Copper Ores 10.1 19.7 -49.2 -20.0 Copper Base Scrap 29.5 54.8 -42.1 -13.4 Manufactured Materials Gypsum Products -0.2 -1.2 5.3 -17.5 Diesel Fuel 20.5 -2.6 -56.2 -30.6 Asphalt Roofing -12.3 -1.0 45.0 53.3 Paint 0.1 0.1 12.4 22.5 Plastic Construction Products -0.5 -0.6 3.0 1.9 Vitreous Plumbing Fixtures 2.3 2.4 4.2 -1.9 Ceramic Tile -2.0 -1.4 -0.2 1.6 Flat Glass -0.4 -1.0 2.9 2.7 Fabricated Building Steel 0.1 -3.6 -3.1 11.1 Hot rolled bars, plates & structural shapes -7.3 -15.7 -25.9 -2.0 Extruded Aluminum rod, bar and other shapes 1.2 -4.3 -26.3 -18.2 Architectural Metalwork 0.6 -2.4 12.1 24.7 Metal Plumbing Fixtures 0.5 0.2 2.2 13.1 Builders' Hardware 0.5 -2.7 6.8 20.4 Sheet Metal Products -0.6 -3.6 0.2 9.9 Steel Pipe and Tube -7.9 -13.2 -8.0 7.8 Nonferrous Pipe and Tube 20.9 26.7 -28.5 -1.3 Building Brick 0.5 -0.2 0.1 0.8 Ready Mix Concrete -1.0 -1.9 3.4 10.7 Concrete Block & Brick 0.3 -0.1 3.3 10.1 Prestressed Concrete 2.5 -2.4 -1.7 2.7 Precast Concrete Products 0.4 -0.3 -2.0 11.3 Concrete Pipe 0.2 0.5 4.1 17.8 Wood Kitchen Cabinets -0.6 1.7 1.9 7.2 Millwork (window,door, cabinet) -0.2 0.7 1.7 5.3 Engineered Wood Products -1.3 -3.3 -2.6 -14.6 Laminated Plastics 0.0 -0.3 3.3 4.0 Assembled Equipment Hand and Edge tools 0.2 -0.3 5.8 11.1 Power Hand Tools -0.1 0.1 1.3 3.8 Appliances 0.6 2.1 5.6 7.5 Furnaces 0.2 0.2 3.3 12.1 Construction Machinery -0.5 0.2 4.5 9.2 Construction Machinery Rental (incl. oilfield equip.) -0.1 0.4 -1.3 7.1 Trucks over 14,000 Ibs. GVW 0.0 1.2 5.0 11.8 Metal Doors, Sash and Trim -0.8 0.2 5.4 9.2 Summary Construction Materials (commodity level) -2.3 -3.1 -1.7 4.9 Inputs to Construction Industries -0.4 -1.6 -3.6 6.4 Inputs to NR Construction -0.3 -1.6 -5.2 6.3 Inputs to SF Construction -0.6 -1.3 0.5 6.7 Inputs to MF Construction -0.3 -1.6 -2.2 6.1 Inputs to Highway & Street Const. -0.2 -1.6 -9.1 7.2 Inputs to Other Heavy Construction    (indexes incl. installation and overhead) -0.3 -2.6 -8.2 6.3 New Warehouse Building Construction -0.6 -0.6 6.2 26.1 New School Construction -0.1 0.3 11.8 20.9 Source: Producer Price Index, Bureau of Labor Statistics, US Department of Labor, Federal Reserve Board, Census Bureau