Building Material Costs & Availability Likely Impacted by Russian War

Washington, DC, February 28, 2022-The war in Ukraine and the West’s response are likely to have multiple effects on construction materials costs and availability, reports Associated General Contractors of America.

“The most immediate impact is likely to be on diesel fuel and gasoline prices. The national retail average price of on-highway diesel fuel was $4.05 per gallon on Monday, the Energy Information Administration reported on Tuesday. That was an increase of $1.08 (36%) year-over-year (y/y) and the highest level in almost nine years. By Thursday, the futures price for heating oil (a close proxy for diesel fuel) had jumped 12 cents per gallon over the week. In addition, ‘Russia is an important producer of copper and aluminum,’ the Wall Street Journal reported on Wednesday. ‘Any difficulties getting those commodities to customers worldwide would cause fresh disruptions to strained supply chains.’ Cargo ships in the region have been halted or delayed.

“The outlook for other materials is mixed. ‘The lumber market continues to struggle [with] supply chain disruptions,’ New South Construction Supply reported on Wednesday. ‘Low sitting inventory at mills and extended lead times on shipments are back to being the norm. Pricing continues to climb as availability continues to decline. Import lumber typically used to help offset domestic supply chain issues is also seeing supply chain constraints. Severe logistic and transportation problems at the ports continue. Many of the inbound [European spruce-pine-fir] loads moving through the ports are arriving to their final destination weeks after originally promised. These availability issues and high prices are expected to remain for at least the next four to five weeks. Rebar has stayed flat for another month and pricing remains at the levels set in early December. Inventory remains fairly accessible with mills having more sitting inventory available than in the months prior to the December price increase. The regional mills appear to be on different rolling schedules for each size, so inventory has been slightly easier to acquire if buyers are willing to work across multiple mills. Wire mesh has also remained flat through February. There are rumblings of a potential price increase in the coming months, but nothing has been firmly established on what that increase would look like. Lead times have improved slightly with lead times closer to 8-10 weeks. Expectations are for lead times to remain in this range well through summer. [Polyethylene vapor barrier] has also remained flat over the past month, but like lumber, the lead times have begun to stretch out.’

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