Material Costs Set to Moderate in First Quarter 

According to Linesight’s fourth-quarter  Commodity Report and price forecast, prices for construction materials are expected to decline in 2022 after hitting record highs last year. Much of the inflationary pressure on prices was due to shortages prompted by pandemic-related supply chain issues, increased global demand, labor disruptions, and extreme weather. However, with the passage of the US infrastructure bill, it is expected that total construction spending will jump to $1.701 trillion in 2022, a 4.5% increase over 2021.

In 2021, prices for essential construction materials like copper, lumber, steel, and cement hit record highs amid shortages. These higher costs and delays for delivery blunted construction output to $1.626 trillion, compared to previous projections of $1.645 trillion. While the US construction sector still faces many of these challenges, Linesight expects to see declines in prices in 2022.

Report highlights:

  • Prices for flat steel saw the most significant year-over-year increase in 2021 for the commodities tracked in the report, rising 131% to $1,486/MT ($1,348/t), driven by demand for durable goods like appliances and automobiles. However, while global and domestic production has ramped up, Linesight expects prices to decline slightly, flat steel by -0.8% and steel rebar by -0.7% in the first quarter of 2022.
  • Lumber prices surged 32% in 2021 to $9.9/cu ft due to labor disruptions and destructive wildfires in Canada and the United States. Demand, especially from residential construction, continues to be strong. Linesight expects lumber prices to climb moderately by 0.7% in Q1.
  • The price of copper spiked by just over 50% in 2021, to $9,451/MT ($8,574/t) from production issues in China and Peru and increased global demand. However, as the supply chain normalizes, Linesight sees prices declining by 2% in the first quarter.

“The cost and availability of construction materials will continue to be a challenge for the industry in 2022, but we do see moderation and declines in prices for many of these commodities,” said Patrick Ryan, executive vice president, Americas, Linesight. “However, with a surge in infrastructure projects and demand for residential units, we expect construction activity to see continued growth in the coming years.”

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