Housing Starts See Drop, Cold Temps to Blame; Producer Prices Up

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Not great news for U.S. housing starts, which “recorded their biggest drop in almost three years in January, likely weighed down by harsh weather, but the third month of declines in permits pointed to some underlying weakness in the housing market,” reports Reuters.

“Other data on Wednesday showed little inflation pressures at the factory gate in January, even as prices for goods rose for a second straight month.”

“Groundbreaking tumbled 16.0 percent to a seasonally adjusted annual rate of 880,000 units, the lowest level since September, the Commerce Department said. The percentage drop was the largest since February 2011.”

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“Starts in the Midwest tumbled a record 67.7 percent, suggesting unseasonably cold weather could have disrupted activity. But at the same time groundbreaking in the Northeast surged to the highest since August 2008.”

“Frigid temperatures have been blamed for the sharp slowdown in hiring in December and January. They also chilled manufacturing output last month and have been cited for the unexpected drop in retail sales in January.”

“In a separate report, the Labor Department said its seasonally adjusted producer price index for final demand rose 0.2 percent last month as the cost of goods increased. It was the largest increase since October.”

In metal price news for the construction sector…

After falling 3.6 percent, US shredded scrap landed, making it the week’s biggest mover on the weekly Construction MMI®. After a 1.5 percent decline, Chinese rebar closed out the week. The Chinese low price of 62% Australian iron ore fines remained essentially flat. Chinese H-beam steel remained unchanged for the week.

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Chinese aluminum bar remained essentially flat from the previous week. Prices for European 1050 aluminum remained constant, closing the week.

Last week, the weekly US Rocky Mountain bar fuel surcharge increased by a slight 1.4 percent. The weekly US Midwest bar fuel surcharge shifted up 0.9 percent to close this week. The weekly US Gulf Coast bar fuel surcharge fell 0.2 percent after rising 0.5 percent the week before.

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. 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.