The Construction MMI (Monthly Metals Index) continued to lack strong bullish or bearish pressure month-over-month. Overall, the index only dropped by a minuscule 0.13%. Still, many factors remain at play in the construction industry, which seems to be behind the index components’ steady sideways trends.
With the winter months coming, infrastructure construction will likely slow down in the northern part of the U.S. Furthermore, interest rates remain elevated, with most analysts expecting the Fed to avoid taking a more dovish stance until 2024. While the index lacks bearish or bullish pressure in the short term, it continues to battle with bearish pressure in the long term, especially as we move into 2024.
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Construction Industry Jobs Increasing, Which Could Help Falling Steel Demand
According to the World Steel Association’s Short Range Outlook for October 2023, projections for U.S. steel demand equated to a 5.8% increase in 2024 after falling 5.1% in 2023. In addition to this, the Inflation Reduction Act (IRA) and the 2022 Infrastructure Law encouraged the expansion of the infrastructure industry, while re-shoring efforts helped propel a strong rebound in the commercial building industry. Finally, the October report on national employment by the ADP Research Institute revealed that the construction industry saw a 6% increase in wages.
That was not the only good news. According to Finance-Commerce.com (2023/11), the U.S. construction industry added 23,000 jobs in October. This continued growth in construction jobs could raise the demand for steel. Indeed, steel demand rises with the increase of commercial and infrastructure projects, especially in the cases of rebar and h-beam steel. This proves encouraging for the steel sector, which continues to struggle with dropping steel demand.
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Construction Wins for 2024
Throughout 2023, the construction industry witnessed noteworthy progress despite high interest rates. Here are just some of the projects worth recognizing:
- The Grand Avenue Project in Los Angeles: This ambitious undertaking, valued at $1.2 billion, involves the development of a 39-story tower, a 20-story hotel, and a shopping center. Investors anticipate the project will wrap up by the conclusion of 2023.
- The One Vanderbilt Tower in New York City: As the fourth tallest building in New York and the tallest one in Midtown Manhattan, this 77-story skyscraper encompasses office space, an observation deck, and a public transit hub. Construction completed in September 2023.
- The Gordie Howe International Bridge in Detroit: This cable-stayed bridge, which cost an estimated $5.7 billion, connects Detroit, Michigan, and Windsor, Ontario. The structure also holds the title of the longest cable-stayed bridge in North America. Project leaders estimate it will open for traffic in late 2023.
- The Texas Central High-Speed Railway: This $20 billion initiative aims to link Dallas and Houston through a high-speed railroad capable of traveling more than 200 miles per hour. Construction commenced in 2021 and should conclude by 2030 .
- The Purple Line Extension in Los Angeles: With a budget of $9.3 billion, this project involves extending the subway by 9 miles, connecting downtown Los Angeles to the Westwood area. The first phase completed in 2023, and projections say the second phase will wrap up by 2027.
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Construction MMI: Noteworthy Price Trends
- Weekly Midwest bar fuel surcharges moved sideways with a modest 1.56% increase, which left prices at $0.65 per mile.
- Chinese h-beam steel also moved sideways, only declining by1.99%. This left prices sitting at $497.87 per metric ton.
- Chinese steel rebar rose a total of 5.15%, which brought prices to $553.94 per metric ton.
- Finally, Chinese aluminum bar also moved sideways, dropping by 1.12%. This left prices at $2,854.91 per metric ton.
