The past year has seen a lot of upheaval in the markets as the pandemic has swept around the world. Several different sectors affect what is going on in the concrete construction industry, which means all of this upheaval has certainly affected operations for many of us. Let’s take a look at where things are now—and what the future is likely to bring.
Scrap is Down but Mills are Struggling
As of April 15, scrap prices were down $30 per ton over March prices—which sounds like it would be a good thing for those using scrap to produce rebar. However, at the same time, most mills are reporting that they are oversold, and little relief is coming in the short term. That’s because right now, demand is high and there have been lots of shutdowns in metals and mining, which has caused delays and price increases on raw materials.
What does this signal? Right now, indicators are pointing to little chance of movement on rebar prices until late in the year when hopefully mills can get caught up on orders and mining operations can get back on track.
Demand Expected to Rise
With the turmoil in the markets, most mills are not currently taking on any new customers and have even gone so far as to limit some of their projects. As a consequence, demand for these products is rising—and that means that these rising prices will offset any small reductions that come from lower scrap prices.
On the shipping front, imported concrete accessories are still dealing with slow shipments out of Asia because of shipping delays, vessel availability, and container availability. With that, shipping costs have soared. Freight rates from Japan doubled between Q1 of 2021 and Q4 of 2020, for example. All of this means that in addition to rising costs, any imported container products are expected to take around six months to reach U.S. ports.
Softwood Lumber Reaching Record Highs
In March, the softwood lumber prices soared to yet another record high. According to the softwood lumber Producer Price Index, the cost has risen 42.6% since November 2020—and that’s another key cost that can affect those of us in the concrete construction industry. Forecasts show that lumber pricing is likely to continue to rise even as the world gets back on track as the pandemic is winding down in most countries. This is likely because even as the pandemic slows, demand for lumber will go up as more places reopen and more construction projects get underway.
In the short term, difficulties and rising prices are expected to continue as world markets grapple with the far-reaching effects of the pandemic. In the long term, however, things do look a bit brighter. It’s hard to say how long, exactly, the markets will remain in turmoil because everything depends on how long it takes to rein in the pandemic so that we can return to business as usual. However, when that does happen, market prices along with shipping costs and times should begin to stabilize.