Our construction metals index fell slightly this month despite strong US housing demand and generally good employment numbers.
The monthly Construction MMI® registered a value of 74 in July, a decrease of 1.3% from 75 in June.
The drop was mainly driven by hefty price hits to Chinese rebar and H-beam steel – yet the dip was spared from going lower by a more than 10% spike in the US shredded scrap price.
The construction sector neither lost nor gained jobs in June, according to the Bureau of Labor Statistics, and the Commerce Department said permits to build new homes surged 12% in April to an annual rate of 1.275 million, the highest since August 2007. Permits for apartment construction were the breakout leader, while permits for single-family homes, a much broader segment, still rose modestly.
Confidence among US homebuilders, as measured by the National Association of Home Builders’ index, rose to its highest level in 9 months in June, so all signs point to a strong building season domestically.
Meanwhile, the developing world isn't exactly holding its part of the construction spending deal up. A recent World Bank report detailed how China's state-run banking sector is creating debt while not delivering on the construction stimulus promises Beijing has made. With Brazil still mired in recession and Russian construction limited to heavy pipeline work, the BRICS countries are not developing at the rates they earlier envisioned.
Oil & Gas Demand Up
Demand for oil and gas products such as steel tubes has rebounded domestically as the US passed Russia this month as the world's top natural gas producer. Baker Hughes reported that the rig count for US oil producers increased for the first time this year, despite massive output by Saudi Arabia and other OPEC countries trying to undercut US producers' prices. It was the first weekly increase in 30 weeks.
Actual Construction Material Prices
Construction purchasing remains on the cusp of what could be a breakout, but both lending and a shortage of skilled labor remain major concerns.
The price of Chinese rebar fell 7.4% to $341.39 per metric ton. At $368.77 per metric ton, Chinese H-beam steel was down 6.9% for the month. Weekly US Midwest bar fuel surcharge prices fell 4.6% to $0.30 per mile after rising the previous month. After rising the previous month, weekly US Gulf Coast bar fuel surcharge prices dropped 4.3% to $0.30 per mile. A 3.8% drop over the past month left Chinese aluminum bar at $2,134 per metric ton. Weekly US Rocky Mountain bar fuel surcharge prices fell 3.6% to $0.31 per mile after rising the previous month. After rising the previous month, European 1050 aluminum prices dropped 0.4% to $2,907 per metric ton.
The price of US shredded scrap rose 10.2% over the past month to $280.00 per short ton.
Last month was consistent for the Chinese low price of 62% Australian iron ore fines, which did not move from $77.30 per dry metric ton.
The Construction MMI® collects and weights 9 metal price points used within the construction industry to provide a unique view into construction industry price trends over a 30-day period. For more information on the Construction MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.