ARTBA report finds iron and steel scrap up 94 percent, highway construction material prices up 15 percent
Prices for iron and steel materials are up 93 percent in May 2008 from May 2007, according to an American Road and Transportation Builders Association economic report released in June. The report found the higher cost of steel and metal prices has been a major driving force in pushing the annual cost of road construction materials 15 percent higher than in the same month of 2007. During this same time period ARTBA economic reports show a 4.2 percent in inflation measured by the Consumer Price Index. Overall, ARTBA has measured 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%
- Cement: 0.8%
The trend of material costs outpacing inflation has increased the cost of doing business in the transportation construction industry, says ARTBA economist Alison Premo Black. In addition, she notes global competition for limited resources impacts the cost of some materials, mainly iron and steel used in projects in the United States.
“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,” says 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.”