Monthly Construction MMI® Holds Steady at 92

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The monthly Construction MMI® registered a value of 92 in March, on par with February’s value. Drops in US shredded scrap and aluminum prices tempered ferrous price increases, resulting in a holding pattern for our construction metals index.

Single-family housing starts, home prices, and the Architecture Billings Index (ABI) are all continuing to climb as we head into the latter part of Q1 2013. Seems like commodity prices used in those sectors are lagging those positive indicators just a bit.

“A strong housing sector will help to drive the U.S. economy forward in 2013, but there are still obstacles to be overcome, most of them artificially created in Washington,” wrote Alex Carrick, the chief economist on the Canadian side for our friends over at Reed Construction Data.

We mentioned those ‘artificial obstacles’ in our Raw Steels MMI® earlier this week – the current mess the US government has on its hands called “sequestration.” Spending cuts and effective tax increases may affect the construction sector down the line, but to what degree is not yet certain. As Bernie Markstein, Reed’s US chief economist, put it, “there is already a disruption to contracts and spending (note the cutback in defense spending at the end of last year).”

January figures for US construction spending were off slightly from December’s figures, but the $883.3 billion seasonally adjusted annual rate of spending was still 7.1 percent higher than the same time last year.

Construction industry contractors and equipment distributors remain confident about future growth, according to a recent construction outlook survey by Wells Fargo. The industry expects the residential sector to lead the way and rental fleets to grow; and roughly 80 percent of the contractors surveyed responded that they intend to buy new and/or used equipment in 2013, indicating optimism.

Primary Price Drivers of the Construction Index

The price of Chinese H-beam steel jumped 6.0 percent last month to $626.66 per metric ton. Chinese rebar prices increased 2.7% to $615.42 per metric ton last month. European 1050 aluminum saw its price rise 1.5 percent to $2,887 per metric ton. The Chinese low price of 62% Australian iron ore fines grew 0.4 percent to finish at $183.18 per dry metric ton.

The price of US shredded scrap fell 3.9 percent to $374.00 per short ton.

Chinese aluminum bar traded sideways last month, staying around $2,258 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.