This may not be the sexiest post, but I think it’s one that is close to all of our wallets.
We have been working toward getting a really cool adaptive reuse project started, converting a steel plant to mixed-use space with offices and restaurants. Once again, commodity pricing is an issue, steel in particular. Our estimators priced the steel package at $2 million in the 3rd quarter of 2021, and we’re now up to $2.7 million. Good news, our folks were creative and were able to absorb this increase cost and move to a start. Seems that steel has been the biggest troublemaker right now.
This week, I did some research for one of our major, long-term relationships regarding steel, as they are ramping up their program again. Amazon has been the driving force, often paying 50-60% above market value for steel, along with other distribution centers absorbing much of the steel joist market. The good news is, those heady days seem to be coming to an end as e-commerce slowly regulates back to pre-pandemic trends. I say this because Amazon and all of these DCs have been a big sinkhole for bar joist manufacturing, the key to a lot of projects we build.
Also, while talking with one of our longtime steel fabricators, I was told that over the last two cycles (two months) scrap steel pricing has been decreasing. It also sounds like China is getting ready to ramp up steel production again for exports, and some of the tariffs from the Trump days are being eased. Steel is now 10 weeks after shop drawings and Joist are 26 weeks after shop drawings. Beyond all, hopefully commodity pricing increases have begun to level.