Iron Ore, Scrap Prices Drive Monthly Construction Metals Index Down

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MetalMiner’s monthly construction metals index fell mainly on the back of Chinese steel and iron ore prices, and the US shredded scrap price – the most precipitous index decline since July-August 2012.

This coincides with the ISM’s latest PMI data reading, the lowest it’s been since June 2009, disappointing manufacturing industry watchers.

According to our friends at Reed Construction Data, “Prices for inputs used in nonresidential construction fell for the second month in a row [reflected in MetalMiner’s index, as seen in the graph above]. Major areas behind the decline include drops in copper, steel, and oil prices.”

In addition, the construction spending picture has become clouded with several elements slowing in growth, from non-residential construction down 2.1% for the first quarter over last year, and residential construction growing 1.7% in March, much lower than February’s comparatively whopping 4.0% gain.

“We have some concerns about construction growth, though admittedly some elements remain positive,” said Lisa Reisman, managing editor of MetalMiner.

“These include residential and non-residential housing starts, both steel market leading economic indicators, according to our friends at Gerdau Market Update,” Reisman said.

Key Price Drivers

The monthly Construction MMI® registered a value of 87 in June, a decrease of 3.3 percent from 90 in May.

After falling 12.7 percent, the Chinese low price of 62% Australian iron ore fines finished the month at $150.75 per dry metric ton. At $531.29 per metric ton, Chinese rebar was down 6.6 percent for the month. A 5.4 percent decline for Chinese H-beam steel left the price at CNY 3,490 ($568.77) per metric ton. The price of US shredded scrap fell 4.7 percent to $364.00 per short ton. The price of European 1050 aluminum drifted 0.7 percent lower to $2,779 per metric ton.

The weekly US Gulf Coast bar fuel surcharge rose a slight 2.3 percent over the past month to $0.54 per mile. The weekly US Rocky Mountain bar fuel surcharge increased 2.2 percent to $0.53 per mile. Finishing at $0.51 per mile the weekly US Midwest bar fuel surcharge saw a 0.5 percent shift lower for the month.

Last month was consistent for Chinese aluminum bar, which did not move from $2,290 per 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.