Linesight Reports that Price Stability for Commodities will continue into 2023, helping US Construction Costs level off

After a couple of years of sharp increases, commodity costs are normalizing as global supply chains improve, but question marks about the American economy remain

NEW YORK–(BUSINESS WIRE)–Global construction consultancy firm, Linesight, today released new data showing that the cost of commodities that are key for the construction industry has stabilized or slightly decreased, and is expected to remain lower for at least the first half of 2023. The company’s Q3 Commodity Report also indicates that there is cause for optimism about the US construction industry, despite uncertainty regarding the health of the US economy.

Patrick Ryan, Executive Vice President for the Americas at Linesight, says that “although issues and risks still remain when it comes to acquiring and shipping key commodities, global supply chains are improving. The availability of materials remains a challenge and may take longer to see a levelling off. Additionally, there are still challenges with producing and shipping long-lead equipment. Economic issues remain a concern, and the construction industry is still at risk. Nevertheless, the medium to long-term outlook appears to be positive, with growth expected in the coming years as inflation comes under control. Overall, we at Linesight envisage stabilization and reduced volatility prevailing.”

Among the key findings in the report are:

• After a prolonged period of volatility, lumber prices have been on a downward trend since the end of Q1 2022. Supply-side fragilities have also eased: lumber mills in British Columbia have gradually rebuilt stock after flooding earlier this year and US tariffs on Canadian lumber have more than halved to 8.59 percent, putting further downward pressure on prices.
• Steel prices have flattened over the past quarter and weakening demand points to a fall in prices. However, high energy prices continue to drive up production costs, and over the medium to long term demand will be sustained by infrastructure spending in the US.
• After the sharp fall in prices in early summer this year, copper has stabilized. Copper prices have faced contrasting market dynamics. Supply disruption from protests in Chile and Peru, and a lack of investment in new mining operations have contributed to production shortfalls. Investment in EVs, along with renewable energy production and infrastructure, will put upward pressure on prices.
• Cement and concrete prices have continued to edge upwards in recent months, primarily reflecting higher production costs (which were up by around 14 percent year-on-year in Q3 2022). With production and transportation costs unlikely to ease markedly, cement and concrete prices will remain close to current highs.
• Early indications suggest some stabilization in shipping durations is returning to the market, but the associated costs remain volatile due to the global fuel crisis.

Ryan says that the most important issue right now is mixed data on the US economy. “In spite of two consecutive quarterly declines, there are positive indicators being recorded to suggest economic resiliency in some key areas. For example, we are seeing the lowest unemployment rate in five decades, and the Federal Reserve has taken a particularly aggressive stance in combatting inflation. Uncertainty about what a recovery will look like is going to have a significant impact on the health of the construction industry in the months and years ahead.”

To request the full report, please click here.

About Linesight

Linesight is a multinational construction consultancy firm with over 48 years’ experience, providing cost, schedule, program, and project management services to a multitude of sectors including Life Sciences, Commercial, Data Centers, High-Tech Industrial, Residential, Hospitality, Healthcare, and Retail. Linesight’s specialist project teams, each with specific skills and experience, provide better predictability of project outcomes, faster project delivery, greater cost efficiency, and maximum monetary value for its clients. For further information, please visit http://www.linesight.com.

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