Skyrocketing Iron and Steel Prices Push Highway Construction Materials Up 15%

Staff -- Associated Construction Publications, 7/1/2008

(Washington, D.C.)—Prices for iron and steel components were up a whopping 93 percent in May. Higher steel and metal prices were one of the driving forces in pushing overall highway and street construction materials 15 percent higher compared to the same month in 2007. That’s the key finding in a June 30 American Road & Transportation Builders Association (ARTBA) economics report. During the same time period, inflation, as measured by the Consumer Price Index was 4.2 percent. Overall, ARTBA has tracked a 48 percent increase in combined material costs from 2003 through the end of 2007.

The ARTBA "Highway Construction Producer Prices" report outlines year-over-year increases in the following categories:

Iron and steel scrap: 93.3%
Asphalt paving and block manufacturing: 8.4%
Sand, gravel and crushed stone: 6.7%
Ready-mix concrete: 2.4%
Concrete block and brick: 2.0%
Cement: 0.8%

An ARTBA economist said the trend of material costs outpacing inflation has sharply increased the cost of doing business in the transportation construction industry. In addition, she noted global competition for limited resources dramatically impacts the cost of some materials — particularly iron and steel — used in U.S. projects.

"About 12 percent of the steel used in the United States is acquired from a volatile worldwide market. When demand increases in growing nations like China and India, costs rise for U.S. contractors who must compete in the global marketplace to secure steel inputs," said Alison Premo Black, ARTBA vice president of policy. "Higher prices for other key raw materials, such as sand, gravel and crushed stone, are impacted by a number of domestic factors, including environmental challenges geographic distribution and quality requirements."

EDITORS NOTE: A complete copy of the ARTBA "Highway Construction Producer Prices" report is available in the "Economics and Research" section of www.artba.org.