Q2 2024: Construction Materials Update

Construction material prices have been overall stable this year and are predicted to remain steady through the middle of 2024. We are still seeing a gradual acceleration of some material costs, but not double-digit increases like in recent years. Lead times for all materials have improved except for electrical gear; switchgear & transformer materials are expected to be problematic throughout the rest of 2024. Nationally, crude oil prices are expected to decline in the second half of the year while natural gas prices are expected to rise. Drywall products and ready-mix concrete continue to increase this year.

At Centerline we are certain that shared knowledge and data-driven forecasts are the best tools to provide accurate estimates as we continue into 2024. By studying what the industry is experiencing today, we can help better predict patterns in future construction climates. Through research and informed conversations, we can prepare for what’s next. We hope you and your team find this issue of the Construction Market Bulletin to be a valuable resource for all current and upcoming projects.

STEEL

Structural Steel started off 2024 with an increased price of about 3% however since then, prices have dropped 4% through Q2 2024. Lead times are reasonable.

There are no signs of erratic price changes on the horizon as seen in 2023. The most recent price trends and projections point to minor decreases into Q3 of 2024

Hot Roll Steel prices can be affected by many industries including the automotive sector however, the Construction & Infrastructure sector is the primary sector. Building starts will determine the demand on steel.

Interesting fact: Structural Steel material is currently at Q1 2018 prices. From 2018 it dropped nearly 50% by Q4 2020, then had a unprecedented gain of 3X its value by Q1 2022. Since then, there has been a steady decline to date. One of the most volatile products in the last 7 years!

For example:

Q1 2018: $2800 per Ton
Q4 2020: $1300 per Ton
Q1 2022: $3800 per Ton
Q2 2024: $2800 per Ton

Hot Rolled Steel- is used for common building structural steel shapes such as I-Beams-Columns-Brace Frames, Angle Iron, etc.

Cold Rolled Steel- is mostly used for Metal Stud Framing products and corrugated concrete decking.

PLUMBING & PIPING

As anticipated, plumbing materials are on the rise this year due to demand and some lingering supply chain issues will impact various product.

In Q2 2024 ABS Pipe continues to show a steady increase in cost with no slow-down in sight. This is driven by factors such as urbanization, infrastructure development and the need for sustainable construction materials.

CONCRETE

Ready Mix Concrete (RMC) has increased 3.5% since Q1 2024. Prices are trending upwards into Q3 due to projections of a strong demand for the rest of the year. Availability of RMC for typical building construction poses no issues. The largest demands put on the RMC market driving market growth are: 1) Global infrastructure development, and 2) Increase in urban development.

Ready Mix Concrete- Ready Mix Concrete is currently priced at an average cost of $183 per Yard for a typical 3000 PSI 3/8 mix. A standard 9 Cubic Yard Truck will cost approximately $1,900 including tax and delivery with regional cost variations. This will cover approx. 20’x25’ slab 6” thick or a Round Concrete Column 3’ Dia x 34’ High.

Fun Fact- Concrete is the most used construction material in the world with 20 billion tons produced every year! Thate equates to 1,111,111,111 Concrete trucks. These trucks lined up will circle the earth 338 times. Or consider this, every 13 years enough concrete is produced to cover the state of Texas, 261,232 Square Miles with a 6” thick concrete slab. Perhaps the massive amount of concrete usage is because the aggregates and water used to create concrete are available virtually everywhere.

RMC current average price

$183 per cubic YD

Fiberglass Insulation

Fiberglass Insulation has had a long upswing year over year since Q2 2021. The trend changed in Q1 2024 with a 6% decrease marking the first decline in prices, with a steady downward 3% reduction month to month to date.

The substantial growth is driven primarily by factors such as the increased demand for energy-efficient buildings with design criteria and features that insulation provides.

ELECTRICAL

Conduit pricing using a common ¾” diameter EMT, showed a decrease in cost since the beginning of the year, currently down 7% and are projected to show a continued decreasing trend to a flat market. The market outlook for Q3 and Q4 is anticipating a consistent and stable price point due to the current abundant supply of aluminum used to make EMT Conduit.

The price of Copper Wire continues to drop over 10% since Q1 2024 despite widespread amount of projects. The latest projections show signs to reverse this drop in price. Talks of supply disruptions are due to anticipated copper shortages globally that could potentially impact the electrical wire cost. One situation in particular impacting copper are union strikes at mines in Panama and Peru. There are approximately 700 copper mines in operation globally, and 90 are in Peru.

While Conduit and Wire have decreased, other electrical components have experienced significant material price increases, and are still trending up. Switchgear and Transformer equipment lead times remain an issue. This lead time situation is expected to worsen into Q3 and Q4 this year.

HVAC EQUIPMENT

HVAC equipment pricing has leveled off in 2024. Since Q1 2024 Centerline’s sources have announced a mere 1% increase using a package for a 15,000 SF buildout with the following equipment:

(1) 12.5 Ton Packaged Unit
(1) 17.5 Ton Packaged Unit
(1) 10.0 Ton Packaged Unit
(3) Hail Guard Kits
(3) Roof Curb Kits
Filters
Commodities Surcharge
Freight

HVAC Sheet Metal Ducting

HVAC Sheet Metal material has remained stable through Q2 2024. Galvanized G-90 Sheet Steel is currently running $0.85 per LB at a 1%-2% increase pace per month. This HVAC material pricing could increase into Q3 and Q4 as a result of new regulations and standards related to decarbonization.

METAL STUD FRAMING

Metal stud prices have had a long run of escalations since October 2023. However, in Q1 2024, they started trending downward and leveling out (depending on the product). As we continue into June metal stud framing material prices continue spiraling downward.

Centerline’s direct vendor contact has shared with us that the main reason for the 2024 drop in pricing is due to the major steel mills, like Nucor, dropping their prices on future orders. These mills raised their prices across the board anticipating a significant demand in January 2024 which never materialized. The demand did not meet the projections. They feel the reduced demand is due to high interest rates coupled with developers’ reservations about the election year economy.

Roofing

The first two months of 2024, roofing supply companies have discounted prices significantly. These products remain on a steady flat trend to a sight continued decline.

Framing Lumber

Lumber prices experienced a significant decrease of 6% at the beginning of the year due to high interest rates causing a continued decline of housing starts this year. Spring and summer months historically have a positive impact on demand for lumber and will likely create a steady market into Q3. Plywood products, such as CDX, have also decreased in Q1 and Q2 this year.

The overall outlook predicts lumber prices are unlikely to drop significantly in 2024 even though they have seen relief from the highs of previous years. Demand for lumber products is projected to remain robust, driven by ongoing construction activities and home improvement projects. Housing Starts have dropped 8.8% this year and are a at 3-year low. This fact typically has the most impact on demand, however analysist seem to still have a positive outlook thinking product demand will remain robust.

Home Depot analysts forecast that lumber demand will grow by 1.7 billion board feet in 2024, a 3.4% increase from the previous year and with the U.S. Commerce Department indicating plans to increase tariffs on Canadian softwood lumber from 8.05% to 13.86% in 2024, which will add to higher U.S. prices.

Simultaneous with the above predictions, the commodity experts predict a significant supply increase, with U.S. sawmill production reaching the highest output since the 2005 peak. This would be the second-highest U.S. output level on record and could help keep the overall costs lower than they would otherwise be.

The chart below tracks specific Framing Lumber cost with the following tracking results Q1 2024 to current:

Framing Lumber is down 11%
Larger Timber / Beams and Posts are up 6%
Sheet Goods, Plywood is up 7%

This Centerline chart shows SPECIFIC pricing for common building lumber materials showing purchase pricing changes over the last 4 months.

drywall & sheet products

2024 pricing shows a sharp upward trend in gypsum material products. This rise follows a steady increase since Q4 2020 and is projected to continue without an end in sight.

Top 3 drywall consumers by country