Steel Markets
Construction Costs Hit Recent High Due to Tariffs
Written by Sandy Williams
July 12, 2018
Constructions costs are escalating due to tariffs on a wide range of building and road construction materials, said the Associated General Contractors of America in a new analysis of Labor Department data.
The producer price index rose sharply on construction inputs in June. Aluminum mill shapes jumped 20 percent year-over-year, copper and brass mill shapes 17.4 percent, and steel mill products 12.3 percent. Diesel fuel was up 52.8 percent. June’s increases follow sharp price spikes on other construction inputs in May.
“Many of these increases far outstripped the 4.3 percent rise in the price index for new construction – what contractors are charging to build projects, implying that contractors’ profit margins are shrinking as they absorb some of the increased costs,” said the association’s chief economist Ken Simonson.
Section 232 tariffs on steel and aluminum from U.S. allies Canada, Mexico and the EU, along with the recently announced $200 billion in tariffs on Chinese goods, took place after price data was collected for the index and will push costs up even more, said Simonson.
The producer price index for inputs to construction industries—a measure of all materials used in construction projects including items consumed by contractors, such as diesel fuel—rose 9.6 percent over 12 months, according to Labor data. The year-over-year increase was the steepest since October 2008, Simonson noted.
As cost pressures increase on construction firms, less capital is available to invest in personnel and technology, said AGC officials.
“The broader impact of the new tariffs and the trade fights that are now emerging is a significant and costly loss in productivity for many construction firms,” said Stephen E. Sandherr, the association’s chief executive officer. “Making real, sustained and long-term investments in our aging and over-burdened infrastructure will do more to boost domestic production of strategic resources without exacting lasting damage on construction firms and the high-wage jobs they offer.”
The producer price indexes for construction can be viewed at AGC.org.
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Markets
Steel Summit: Schneider sees SDI ‘on the edge of a very good run’
Steel Dynamics Inc. (SDI) President and Chief Operating Officer, Barry Schneider, remains bullish about the Fort Wayne, Ind.-based steelmaker’s position in the current market.
Sheet market participants say sales still in a slump
Across the US and throughout the steel supply chain, market participants are reporting another painfully quiet week for hot-rolled (HR) coil sales.
CRU: Lower sheet prices have pulled back demand for imports
Domestic sheet prices in the US remained under pressure, limiting interest in imports, while domestic prices for longs products continued to rise.
President Trump intends to set additional steel tariffs
While boarding Airforce One on Friday, US President Donald Trump stated that he would be setting more steel tariffs and putting ~100% tariffs on semiconductors and chips.
USS, government officials give update on Clairton Coke Works incident
U.S. Steel, Allegheny County executive Sara Innamorato, and Pennsylvania Gov. Josh Shapiro clarified details from early reports about the Clairton Coke Works facility explosion just one day earlier.