Construction MMI: Silicon Valley Bank Collapse Spills into Construction Industry

Month-over-month, the Construction MMI (Monthly MetalMiner Index) broke out of its sideways trend and rose amid both positive and negative construction news. For instance, bar fuel surcharges dropped, but h-beam steel and U.S. shredded scrap steel went up slightly. And while some sources report a rise in global rebar prices, others suggest steel rebar futures have fallen. Month-over-month, MetalMiner recorded Chinese steel rebar prices as trading sideways within a tight range. In the case of h-beam steel, possible inventory restocking and higher steel prices continue to impact current prices.

Ultimately, the Construction MMI (Monthly MetalMiner Index) rose by 3.13%.

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Silicon Valley Bank Failure Bleeds Into Construction Industry

The recent SVB collapse left the construction industry more than a little fearful. According to the latest construction news, many feel the bank’s collapse could weaken 2023’s construction. The news has also shaken the affordable housing market in California’s Bay Area and sparked fears of similar failures affecting mortgage lending. With such drastic short-term ramifications, the long-term outlook for the collapse recovery could prove challenging. Indeed, over time, the SVP failure could spill even deeper into the construction industry than it already has.

The SVP collapse would be unwelcome news at any time. However, the U.S. construction industry only recently began recovering after a rough 2022. But despite struggling with labor shortages and high-interest rates, the industry still faces a somewhat rosy long-term outlook. Experts anticipate that construction investments will increase steadily, especially with regard to infrastructure. While those high interest rates pose a temporary challenge, public projects should continue to expand for years. That said, the SVB failure will strain private and affordable housing, particularly in California.

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Construction News Reports Other Challenges

Despite the long-term outlook for construction projects remaining somewhat strong, several short-term challenges continue to impact the industry outside of high interest rates and the SVB collapse. For one, fears of a potential recession in the U.S. continue to make themselves known in construction news. There is no question that a global recession would prove a massive blow to construction professionals. After all, it would create significant difficulty with logistics and sourcing material outside the U.S.

However, experts anticipate that public works construction will rise by 18%. Thanks to the Infrastructure Investment and Jobs Act, the sector should reach a grand total of $225 billion. Predictions say that the U.S. construction industry will also rise up 6.1% in 2023, reaching $1,419,192 U.S. But while this is good news in the long term, the construction industry still has to battle numerous challenges in the short term.

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Construction News Reports Iron Ore Prices Rising, Steel Rebar Could Follow Suit

Last week, MetalMiner discussed how iron ore prices continue to rise. This increase is largely due to improved steel plant profitability and a positive demand forecast in China, the world’s largest steel producer. Indeed, China’s steel production outlook continues to improve steadily. In recent construction news, steel rebar prices have responded by edging up slightly.

Rebar continues to exhibit bullish action with Chinese demand and steel production up. Moreover, the Chinese government has put strict regulations on iron ore purchasing to prevent buyers from hoarding. The move could place additional bullish pressure on iron ore and, by extension, steel rebar.

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Construction MMI: Notable Price Trends

• Chinese steel rebar traded sideways, edging up 1.74%. This brought prices to $629.77 per metric ton.
• Chinese h-beam steel rose by 5.82%, leaving prices at $629.88.
• Weekly Rocky Mountain bar fuel surcharges dropped by 4.29%, bringing prices to $0.67 per mile.
• Finally, European 1050 commercial aluminum sheet traded sideways, dropping a slight 1.79%. This brought prices to $3,885.13 per metric ton.