The monthly Construction MMI® dropped 1.1 percent in May, primarily driven by Chinese rebar, Chinese H-beam and US shredded scrap prices (which certain folks in the industry say has not nearly hit bottom for the year) and officially hitting the one-year mark of wallowing under the Jan. 2012 index baseline.
Total commercial construction spending fell at a seasonally adjusted annual rate of 1.7% in March to $856.7 billion. Our construction metals index drop is likely more correlated to nonresidential building construction spending decreasing 2.2%, and heavy engineering (non-building) construction spending dropping 3.7%, respectively, in March. (Check out more indicators compiled by our friends over at Reed Construction.)
On the slight upside, the S&P/Case-Shiller Home Price Indices showed that average home prices rose 9.3% for the year ending in February 2013, reported to be the biggest annual increase in residential real-estate prices since May 2006, thanks primarily to lean inventories – which may bode well for near-term residential construction.
Also, the March reading of the Architecture Billing Index (ABI) was still above 50 (the eighth consecutive month above 50) , which indicates increased billings—a positive for future commercial construction.
Key Price Drivers
The weekly US Midwest bar fuel surcharge declined 5.8 percent over the month to $0.53 per mile. Following a 5.5 percent decline in price, European 1050 aluminum finished the month at $2,835 per metric ton. US shredded scrap prices dropped by 5.2 percent this month to $382.00 per short ton. After falling 4.7 percent, the weekly US Gulf Coast bar fuel surcharge finished the month at $0.51 per mile. The weekly US Rocky Mountain bar fuel surcharge closed the month at $0.52 per mile after dropping 4.1 percent. Chinese H-beam steel fell a slight 2.9 percent over the past month to $598.31 per metric ton. The price of Chinese rebar drifted 2.5 percent lower to $565.88 per metric ton. The Chinese low price of 62% Australian iron ore fines finished the month at $171.87 per dry metric ton after dropping 0.9 percent.
Hovering around $2,278 per metric ton for the month, Chinese aluminum bar remained unchanged.
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.