Construction MMI: Chinese Sourced Steel Prices Spike, Supply Pinches Possible

Construction-MMI-January

The Construction MMI (Monthly MetalMiner Index) rose considerably by 7.68%, with Chinese steel prices getting a significant boost.

In fact, all facets of the index related to China (except for iron ore) increased. The movement came in the wake of zero-COVID restrictions lifting, which resulted in a sharp rise in coronavirus cases. While this was an anticipated outcome, it places concern on procurement professionals as it means Chinese metal production and exporting will continue to have a drag.

Over the past month, Chinese steel rebar, h-beam, and shredded scrap metal all went up in price, and a supply pinch is not out of the question for these products. Buyers continue to purchase these Chinese sourced building metals in large quantities in case a supply pinch comes. As a result, the index keeps inching upward.

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Steel Prices, Material Costs Slowing U.S. Infrastructure

The US construction industry managed to withstand high interest rates and labor shortages throughout 2022, but not without consequence. Indeed, the construction market continues to battle high construction costs. Some companies report seeing 20% – 40% increases in year-over-year costs depending on location and materials. More recently, builders reported having issues getting their suppliers to commit to material arrival times. This adds another layer of stress to the mix, as many suppliers cannot determine when they’ll receive the materials themselves.

Silhouette Teams of Business Engineers looking for blueprints in

In the case of Chinese-sourced metal, the culprit is a combination of zero-COVID and rising COVID cases within the country. And with Chinese production still at a crawl, it’s hard to say when things like Chinese steel rebar and h-beam orders will arrive. Another factor, at least for European-sourced materials like commercial 1050 aluminum sheets, is the ongoing energy shortages across the continent. With the winter months in full swing, heating buildings and other vital functions take precedence over industrial production.

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Private Construction Work Still Slow

Private construction work slowed down significantly in 2022, mainly impacting steel prices. Indeed, a drop in demand, high interest rates, and labor/supply shortages all hurt the private construction sector. However, many still hope that public work projects can aid the industry. “Contractors are optimistic about the construction outlook for 2023, yet they are expecting very different market conditions for the coming year than what they experienced last year,” said Stephen Sandherr, CEO of the Association of General Contractors of America.

Economic trade war between USA and China, freight transportation

The AGC also released an article detailing the 2023 construction outlook in the U.S. It mentioned how many challenges that hurt the construction industry in 2022 would continue to thwart builders and contractors in 2023. The report also indicates that transportation, roads, and highways appear strong in the 2023 outlook. However, this particular section of market will also face challenges. One such example is steel rebar coming from China. Due to the condition of China’s economy, both production and high steel prices could pose problems. Of course, rebar is necessary for almost all concrete construction, including roads.

Right now, the public projects sector appears robust in terms of demand. However, only time will tell if supply chains can keep up.

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Construction MMI: Steel Prices Trends and More

  • Chinese steel rebar rose in price sharply by 12.62%. Prices currently sit at $590.32 per metric ton.
  • Chinese h-beam steel also rose in price by 2.77%. Prices currently sit at $534.33 per metric ton.
  • United States Weekly Gulf Coast, Weekly Rocky Mountain and Weekly Midwest bar fuel surcharges all traded flat with no change in price month-over-month.
  • Finally, European commercial 1050 sheet aluminum saw a small drop in price of 0.79%. Prices currently sit at $3955.78 per metric ton.

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