Article source: ConstructConnect
The headlines are no longer screaming about steeply climbing lumber prices. The ultra-sharp gains are over and a pullback phase has settled in.
A moderation in price was expected due to housing starts leveling off and home renovation projects being put on the back burner, as the leisure-time days of summer are replaced by the more frenetically paced days of fall.
July’s Producer Price Index (PPI) for softwood lumber, shown in Table 1, was -16.3% compared with three months ago in April. The latest month-to-month price change was -29.0%.
As Table 1 and Graph 1 set out, however, the price advances for other forestry products, and for a multitude of other inputs used in the building process, have not let up much.
Prices for plywood and particle board/OSB are both higher by double year over year and by one-third over the latest three months (which will be referred to as quarter over quarter or q/q). Month to month in July, plywood was +3% and particle board/OSB, +7%.
Steel bars, plates and structural shapes in July were +43.7% year over year, +10.5% over the latest three months and +6.0% month to month. Iron and steel scrap used in electric-arc steelmaking furnaces was +103.8% y/y, +16.3% q/q and +0.8% m/m.
Interestingly, the Consumer Price Index (CPI) for used cars and trucks, the eventual primary source of steel scrap, was also higher by an extraordinary amount in July, +41.7%.
The ‘steel pipe and tube’ PPI in July was +48.8% y/y, +16.4% q/q and +9.0% m/m.
July’s aluminum mill shapes PPI was +33.2% y/y, +6.9% q/q and +1.5% m/m.
Some of the other dramatic year over year PPI sub-category increases in July were: gasoline and diesel fuel, a little more than +80%; gypsum, +22%; insulation materials, +12%; air conditioning and heating equipment, about +10%; paints and architectural coatings, also +10%; and flat glass, +9.5%.
