Non-Residential Construction Material Prices Skyrocketed in 2021

Meanwhile, the war in Ukraine is only making matters worse.

Source : Wikimedia Commons

March 15, 2022

Author : Alex Bustillos

Non-residential construction material prices rose 20 percent in one year according to data collected even before the war in Ukraine heated up.

Some commodity price figures from February show massive cost increases even prior to the Russia-Ukraine war. A new analysis from the Associated General Contractors of America (AGC) shows that common materials used in non-residential construction have dramatically risen in cost.

Diesel fuel prices shot up by 57.5 percent and steel mill products spiked by 74.4 percent from February 2021 to February 2022.

According to AGC chief economist Ken Simonson, the war in Ukraine has even further increased these prices.

“Even though the February numbers represent some of the highest year-over-year price increases ever recorded, they have already been surpassed by even steeper price hikes since the war in Ukraine broke out,” Simonson said.

According to Simonson “since the time these prices were collected, multiple increases have taken effect for metals, fuel, and trucking, while supply chains have become even more snarled.”

In addition to massive cost increases for diesel and steel mill products, aluminum mill shapes increased 37.3 percent; lump and plywood, 22.5 percent; asphalt, tar roofing, and siding products, 22.5 percent; architectural coatings, 20.3 percent.

The rising costs of materials compound with labor shortages, forcing contractors to charge more for work, AGC notes. Further increases in material prices could lead to a drop in demand, which would threaten the construction industry’s pandemic recovery. As such AGC is calling for “new efforts to ease supply chain backups” and for government officials to act quickly to rein in material prices.

“At some point projects will no longer pencil out as contractors have to raise bid prices to keep pace with the rapid inflation in materials costs,” AGC CEO Stephen E. Sandherr said. “Public officials can help by giving contractors more flexibility to adjust contract amounts to keep pace with spiking materials prices.”

Photo via Wikimedia Commons.

Category : Federal Government Material Costs

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