Tag: Construction Prices

Spending Up in October, Construction MMI Soars After Election

The Census Bureau reported late last week that U.S. construction spending was up during October by 0.5% compared with the September total. Year-over-year, construction spending in October was up by 3.45. During the first 10 months of the year, construction spending amounted to $972.2 billion, 4.5% above the same period in 2015.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

Our Construction MMI was up 8.7% as domestic demand for construction metals shot up just as prices increased nearly across the board for the entire industrial metals complex.

Construction_Chart_December_2016_FNL

Construction demand in the world’s largest metals consumer, China, continues to grow even as the central government there tries to restrict home buying, the engine for that demand.

“It’s likely that the government will expand infrastructure investment to make up for the gap left by property-related investment falling,” Julia Wang, China economist at HSBC told the Financial Times.

What is buoying construction the most is an investor class now excited about all industrial and construction metals. The election of President-elect Donald Trump promises $1 trillion in U.S. infrastructure investment and stronger protections against dumping of foreign imports.

Trump’s policies, while still in their formative stages, are seen as bullish for public construction, particularly infrastructure such as roads, bridges and airports. Stocks of construction companies and materials providers also jumped after Trump’s election.

Public construction spending actually accounted for most of the increase in U.S. construction spending in October — unusually, since that sector has been contracting in recent years — gaining 2.8% compared to September. Spending on educational facilities was especially brisk, up 4.1% for the month, while highway construction gained 1.9%. Compared with last year, however, public construction spending as a whole was off 0.6%.

Two-Month Trial: Metal Buying Outlook

While Chinese demand remains a concern, it’s a very good time to be a construction metals investor with positive sentiment nearly across the board when it comes to both construction and metals.

Construction MMI Soars as Spending Increases in the U.S., China

U.S. construction spending increased in March to its highest level in more than eight years and our Construction MMI shot up 15.9% along with it. Gains in home building and nonresidential construction offset a drop in government projects.

Two-Month Trial: Metal Buying Outlook

Construction spending rose 0.3% in March after a 1% gain in February, the Commerce Department said Monday. The back-to-back increases raised total spending to a seasonally adjusted annual rate of $1.14 trillion, the highest level since October 2007.

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Residential construction grew at a 14.8% annual pace in the first three months of the year. It was one of the few sources of strength in a quarter in which the economy grew at an annual rate of just 0.5% — the slowest pace in two years.

Aluminum, steel scrap and copper all saw gains on the index, moves that are in line with the broad metals mix used in nonresidential and residential construction here in the U.S. In China, numbers are similarly positive.

Chinese housing data for March showed another increase in home sales, putting a dent in China’s housing oversupply and helping the construction reset there. As lower rates and yields work with a lag, sales growth could stay strong in China this year. A reduction in the requirement for a down payment by the central government is also underpinning increasing sales.

While China’s manufacturing purchasing managers index from Caixin Media and Markit Economics fell to 49.4, missing economists’ estimates for 49.8 and down from 49.7 in March, the construction numbers in the People’s Republic remain strong and could, theoretically, pick up the slack this year if manufacturing there remains depressed.

A total of 83.19 million metric tons of iron ore was discharged at Chinese ports during April, according to ship-tracking data compiled by Thomson Reuters Commodity Research and Forecasts.

This was up from the 81.76 mmt offloaded in March, suggesting that China’s iron ore import volumes will show an increase when preliminary customs data is released in the next few days.

Compare Prices With The April 2016 MMI Report

China is back to producing steel at a high rate. Even zombie mills have come back from the dead. While this might not be good for the oversupply situation, it is a good thing for construction estimators and procurement professionals looking for as many options as possible to fulfill orders and reduce prices via competition.

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Construction MMI Climbs, Chinese and US Markets Look to Keep Momentum

Our Construction MMI continued to rise out of the trough it spent much of 2015 in last month, consolidating its March gains and even gaining 1.6% more.

Free Sample Report: Our April Metal Buying Outlook

The cautious optimism we’ve been seeing for the last few months is showing signs that it might turn into something more. The Census Bureau reported that construction spending increased 0.5% between January and February and was up 10.3% year-over-year.

Healthy Increases Over 2015

Non-residential construction declined 1.4%, but was up 10.1% from last year’s level. The agency said eight of the 16 non-residential sectors saw an increase in February. Overall, construction spending actually slipped .5% from January to February, but the entire year was still positive compared to last year.

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It’s not just the U.S. market, either. The world’s largest consumer of construction materials, China, is finally seeing some returns from stimulus efforts. The central government there loosened policies, prompting a home sales rebound in 2015 and the looser lending standards are leading to more home buying and even some commercial construction gains.

Chinese Housing Stimulus

China’s smaller cities are not seeing the rebound that the larger metropolises are and there is concern that a dangerous property bubble is forming in the larger cities such as Beijing, Shanghai, Shenzhen and Guangzhou, which have recorded sharp gains in housing prices since the Lunar New Year holiday in February. Still, the purpose of stimulus is to stimulate and China seems to have finally found a way to increase construction and buying.

Free Download: The March 2016 MMI Report

Back, here in the U.S., steel mills are cautiously (there’s that word again) raising prices of rebar and other construction materials as we enter the traditional building season in the Midwest and Northeast. All of the macro factors are there to sustain the recent price increases we’ve seen in construction materials — a weakening U.S. dollar, a general commodities rally led by oil and strengthening demand in large markets — but we continue to advise buyers to be prudent and pay attention to the market before committing to large volumes. Nothing has stuck just yet.

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