By all accounts, the US housing market hasn’t looked this sweet since before the 2008-09 recession.
Whether one measures the pick-up by new home sales, average re-sale home prices, the shortage of homes for sale, housing starts (still growing at a 25.9 percent annual rate of consumption, though down from March’s peak of 30.6 percent, according to ITR Economics) or housing permits – the data looks solid.
Reflecting the general construction market data, MetalMiner’s monthly Construction MMI® – which tracks prices of metals used within the construction sector – clocked in at 89 in December, an increase of 1.1 percent from November. The increase was largely due to rising beam prices in China as well as a spike in US shredded scrap prices. (Get the full price breakdown below.)
Here’s the Economic Backdrop
To put the housing market in context with total construction spending, for the month of October 2013 it made up 36 percent of the pie (based on a $908.4 billion spend):
Total construction spending one year ago came in at $863.06 billion, so 2013 data shows a 5 percent increase. Federal spending also increased by more than 10 percent, while state and local government expenditures on construction-related projects increased.
But not all construction news appears positive. Non-residential spending fell by half a percent in October due to lower private power plant construction, amusement parks, and recreation centers, etc.
Takeaways for Metal Buyers in the Construction Market
Market watchers, including us here at MetalMiner, should pay close attention to the recent reforms announced by the central government in China. Many of those reforms may dampen infrastructure and construction spending in the near term, and that could impact steel prices especially.
Key Price Drivers of Construction Index
After rising 7.5 percent, US shredded scrap finished the month on a high note. Chinese rebar ended the month up 6.3 percent. The price of Chinese H-beam steel rose 1.7 percent after falling the previous month. After dropping the previous month, the weekly US Midwest bar fuel surcharge prices rose 1.6 percent.
Last month, European 1050 aluminum prices dropped by 2.0 percent. The weekly US Rocky Mountain bar fuel surcharge kept steady, but the weekly US Gulf Coast bar fuel surcharge fell a slight 0.1 percent.
The Chinese low price of 62% Australian iron ore fines held pat. The price of Chinese aluminum bar held steady as well.
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.