Happy Thanksgiving. At this time of the year, we give even more thanks to our customers and suppliers, without whom we wouldn’t exist. I hope you have a great holiday surrounded by friends and family.
Our big news this month is that we acquired Malone Steel in Ponte Vedra Beach, Florida on November 10. Malone Steel is a 30-year-old rebar fabricator and they give us the capacity to sell fabricated rebar in North Florida over to Orlando. Jeff Malone will continue to manage this location which will now been known as New South Construction Supply – Ponte Vedra Beach. Welcome to the team, Malone!
Commodity pricing continues to be mostly stable. See below for more information.
Metal scrap posted down another $20 per ton to start off November which now results in a seventh month in a row of decline. This continued scrap softening continues to be reflected on metal commodities. The domestic rebar market continues to soften with lower priced import options and demand slowing down. In our region, imported rebar coming into the Texas and Florida market continues to eat into the domestic mills overall consumption. The pricing gap between import and domestic is at its greatest closest to the ports or origin, but the domino effect of more total tonnage available in the market is impacting domestic pricing farther away from the ports. Domestic mills have been able to slow the rate of price decreases but have not been able to halt them all together. Reduced winter scrap collections may help combat a significant short-term reduction, but expectations are for rebar to continue to soften over the coming months.
The wire mesh reinforcing market has also seen significant softening. Overall consumptions levels are off from earlier in the year and there is ample supply at the domestic mills available to the market. With the residential demand slowing, lighter gauge material is seeing the quickest reductions. Heavier gauge and structural mesh remains strong as the commercial side of the construction industry continues to grow. Positively, lead times for almost all mesh sizes has reduced down to under two weeks. Most loads of standard light gauge material are delivering about a week after purchase order submittal.
Polyethylene sheeting is trending much like wire mesh. The reduction in residential construction has allowed most mills to catch up on backlogs and begin building sitting inventory. Loads containing the standard mil and dimension size poly are shipping in about two weeks from order placement. While overall demand is down slightly, import material is also impacting poly pricing. A recent influx of import poly sheeting into the region has forced domestic manufacturers to reassess current pricing and concede pricing in some areas.
The lumber market has seen a slight resurgence over the past few weeks and feels poised to correct the recent bounce along the bottom. While there are no expectations for a rapid or substantial increase, mills have been able to control their recent pricing. Prices are slightly elevating over what has been seen over the past few months. There is still a fair amount of available inventory and lead times are running two to three weeks depending on species, grade, and dimension.
Contractors’ input costs were mixed in October, as increases in fuel, cement, glass, and paint costs offset tumbling metals and lumber prices, according to Bureau of Labor Statistics (BLS) data posted on Tuesday. The producer price index (PPI) for material and service inputs to construction was unchanged for the month and up 10.0% y/y (vs. 11.2% from September 2021 to September 2022). The PPI for inputs to new nonresidential construction rose 0.2% for the month and 11.2% y/y, while inputs to new residential construction dipped 0.2% from September but rose 8.1% y/y. The PPI for diesel fuel leaped 9.8% and 61.5%, respectively; cement, 2.5% and 13.4%; flat glass, 1.4% and 10.0%; and architectural coatings, 1.1% and 27.5%. PPIs plunged for steel mill products, -6.6% and -22.9%; copper and brass mill shapes, -4.9% and -11.5%; aluminum mill shapes, -3.3% and -9.3%; and lumber and plywood, which fell -2.7% for the month but increased 1.3% y/y. The PPI for new nonresidential building construction—a measure of the price that contractors say they would bid to build a fixed set of buildings—rose 3.0% for the month and 20.2% y/y, down from the record 24.2% y/y rise in September. AGC posted tables of construction PPIs.
Click here for the latest update on the construction economy from Ken Simonson, the chief economist of the AGC.