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, however…
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. Following a 5.5 percent decline in price, European 1050 aluminum finished the month down as well. US shredded scrap prices dropped by 5.2 percent this month. After falling 4.7 percent, the weekly US Gulf Coast bar fuel surcharge finished the month down. The weekly US Rocky Mountain bar fuel surcharge closed after dropping 4.1 percent. Chinese H-beam steel fell a slight 2.9 percent, while the price of Chinese rebar drifted 2.5 percent lower. The Chinese low price of 62% Australian iron ore fines finished the month after dropping 0.9 percent.
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.