Linesight Commodities Report Shows Building Material Price Volatility Will Remain in 2022

NEW YORK–(BUSINESS WIRE)–Linesight, a global construction consultancy, expects building materials prices to remain high and volatile in 2022, despite an expected stabilization in the market that many thought would materialize in the first quarter.

Until the end of 2021, many believed that the pandemic-related supply chain issues would begin to ease and allow the market to stabilize, but the Russian-Ukrainian crisis has profoundly affected the situation; both directly, through the primary production of specific materials from these countries, and indirectly, through the overall effects of the conflict on the global supply chain.

Despite the prevailing risks at play resulting from the ongoing conflict – and the material pricing and availability issues these risks are likely to impose on the market – the U.S. construction industry is expected to grow 4.5% in 2022, according to the US Bureau of Economic Analysis.

This recovery in the construction industry should be mainly fueled by an acceleration of activity in the residential sector, which will only considerably increase the demand for materials needed in this sector, especially concrete, cement and other aggregates, which will further drive up prices. Other factors contributing to the expected recovery include growing demand for new buildings and infrastructure in life sciences, high-tech manufacturing and public infrastructure projects.

In 2022, with prices and availability of critical construction materials like copper, lumber, steel and cement remaining unreliable and directly impacting construction output, total construction output in the United States United in 2022 will likely reach around $1.672 billion. That would represent a year-over-year gain of 4.5%, after 2021 saw total construction output of $1.599 trillion.

Other findings from Linesight’s first quarter commodity report and price forecast, which are based on interviews with more than 160 industry experts across the globe, include:

Lumber prices saw the largest quarter-over-quarter price increase from Q4 2021 to Q1 2022 for products tracked in the report, from $8.5/ft³ in the fourth quarter of 2021 and up 79.5% in the first quarter of 2022. Lumber prices are expected to continue to increase through 2022, primarily due to increased tariffs on imports of Canadian lumber into the United States, with an expected price of $16.1/ft³.

Raw material prices for steel also saw a significant quarter-over-quarter price increase from Q4 2021 to Q1 2022, with steel rebar increasing by 4.7% and steel flat 8.9%. This trend is expected to continue due to the Russian-Ukrainian conflict, which is collectively credited with approximately 60% of US pig iron imports.

With construction activity accelerating, demand for steel will be high in 2022. This will likely be reflected in the price of materials, as Linesight’s report projects a year-over-year increase of 12, 2% and 17.2% on steel reinforcing bars and steel plates. , respectively, with an expected price of $1,177/t for steel reinforcing bars and $2,182/t for steel dishes in 2022.

Just as the acceleration in construction activity has significantly affected steel prices, it is also expected to do the same for concrete, cements and other aggregates, with increased demand for infrastructure another major factor pushing the prices. Cement and concrete have already seen their prices increase by 3% from the fourth quarter of 2021 to the first quarter of 2022, and they are expected to climb another 7.7%, with an expected price of $139/t for cement and $144/cubic yard for concrete in the second half of 2022.

Other significant quarter-over-quarter price increases from the fourth quarter of 2021 to the first quarter of 2022 found in Linesight’s first quarter commodity report included a 32.6% increase in welded mesh, 17.1% diesel fuel and 8.1% asphalt.

“Despite the expected stabilization in material costs, due to the ongoing global issues, 2022 is expected to be another challenging year for the construction industry, which will lead to many disruptions, both in the supply chain and in overall productivity. industry,” said Patrick Ryan, executive vice president, Americas, Linesight. “But due to these ongoing disruptions, we are starting to see major strategic shifts in the approach to procurement and supply chain management to minimize risk on construction projects. Many are looking to revise their approach , with some projects moving away from the “just in time” model, others seeking to reduce waste within the supply chain, developing contingency plans rather than being reactive to disruptions, constructing buildings stronger and more diverse supplier relationships and engage early with all stakeholders to build strategies that focus on greater cost and schedule certainty.

To request the full report, please visit here

About Line View

Linesight is a multinational construction consulting firm with over 48 years of experience, providing cost, schedule, program and project management services to a multitude of industries including life sciences, commercial, data centers, high-tech industry, residential, hospitality, healthcare, and retail. Linesight’s specialized project teams, each with specific skills and experience, provide better predictability of project results, faster project delivery, improved profitability and maximum monetary value for its clients. For more information, please visit http://www.linesight.com.

Comments are closed.