WHEN BUILDER REPORTED ON SKYROCKETING plywood and OSB prices in November 2003, the pundits urged calm. They predicted that wood prices would level off by January 2004, and they were right.
What they didn't predict was that those price spikes would return just three months later. During last year's run-up, the wholesale price for OSB panels doubled, from about $6 per 4x8 sheet to around $15 per sheet nationally. This year, prices have already passed the $15 per sheet bar. The reasons given mirror those given for last year's hikes, but that doesn't mean the problem is any closer to being solved. Panel makers in the United States have barely increased production. At the same time, imports are down, due to the falling value of the U.S. dollar and to rebuilding efforts in Iraq.
On the roofing front, there's also bad news. Asphalt costs have been steadily rising. At the same time, the price of steel has spiked, partly because demand has surged in Asia, while the dollar has dropped, according to the U.S. Commerce Department. Sheet steel is selling for about $700 a ton, more than 40 percent higher than average. The price per 100 pounds of hot rolled steel has gone from $23 to $33, directly affecting the price of girders used in construction.
Commercial builders, represented by the Associated General Contractors of America (AGC), based in Alexandria, Va., are ringing the alarm bell. “Steel price increases have been sudden, steep, and devastating,” says Ken Simonson, AGC's chief economist. “I worry these price spikes will cause bankruptcies and job losses.” Simonson notes that prices have also increased for copper, natural gas, and some types of insulation.
Steel price shocks may take a while to trickle down to home builders, but they will feel the ripples—because steel is used in truss systems, fasteners, tools, anchoring equipment, and other
TYPICAL PANEL PRICES This comparison of panel prices in the Baltimore area during the price hike last September shows some possible alternatives.
|Plywood||1/2” x 4' x 8'||$19.35|
|OSB||7/16” x 4' x 8'||$19.19|
|Fiber board||1/2” x 4' x 8'||$4.73|
|Cement board||3' x 5'||$14.99|
|Fiber cement||4' x 8'||$25.00|
|Exterior gypsum||1/2” x 4' x 8'||$15.68|
|Foil insulative board||4' x 8'||$9.35|
|Foam (extruded)||1/2” x 4' x 8'||$8.98|
|Foam (extruded)||3/4” x 4' x 8'||$10.60|
|Source: Nahb Research Center|