To our valued customers,
As we begin the second half of 2022 there are several issues that continue to present challenges to our industry and the economy in general. Supply chain issues have not been resolved in all areas. Areas of improvement will be highlighted in the individual product categories to follow. Freight and transportation is an ongoing issue which has been impacted by rising fuel costs and a driver labor shortage in most parts of North America. While single family housing starts have leveled out, the completion rate has been impacted by the previously mentioned supply chain issues and labor shortages. Multi-family construction remains very strong. Commercial construction is expected to be strong well into 2023 as the Architectural Billing Index (ABI) has been well north of 50 for every month this year.
U.S. Housing Starts Leveling Out
https://tradingeconomics.com/united-states/housing-starts
Architectural Billing Index (ABI) April 2022
https://www.aia.org/pages/6507373-abi-april-2022-architecture-firm-billings-
COMMENTARY BY MAJOR PRODUCT CATEGORY
Our view and outlook for the building materials industry by category for the remainder of 2022 is as follows.
DRYWALL – Allocation on drywall has been implemented in most parts of North America. Lead times are still lengthy on all specialty gypsum products. While commodity products lead times are closer to normal, allocation has limited supply in most markets. Continued issues with raw materials such as vermiculite, latex, wax, and fiberglass mat has created production challenges for manufacturers. Like many other products; energy costs, transportation and freight increases have driven raw input costs higher. Two national drywall manufacturers have announced price increases for July, we anticipate others to follow this trend.
JOINT COMPOUND – Raw materials and in particular latex has been an ongoing issue for this product category. We anticipate a second half price increase for joint compound to offset rising raw materials and transportation costs.
STEEL– After nearly eighteen months of continuous price increases we have seen a leveling off of the announced increases. Increased availability of foreign steel has helped stabilize the price of steel despite transportation issues getting it to the ports. There are basically three U.S. based manufacturers of steel.
There appears to be some increased capacity coming online in the U.S. and the biggest user of steel, the automotive industry, continues to have other supply chain issues. Our view on the end result looks like steel pricing will be stabilized and there may be a slight decline from current price levels. Again, this view is dependent on automotive and appliance industries continuing to be soft and the current European Conflict not escalating any further.
CEILINGS – Unexpected significant increases have been announced for this category. Mineral fiber and fiberglass ceilings announced a 17% price increase effective in July. Architectural Specialties also announced a price increase effective in May while grid products announced a price increase of 14% in the same period.
Additionally, Architectural Specialties, in particular wood products are experiencing extremely elongated lead times. We believe these extended lead times will continue throughout the remainder of 2022.
INSULATION – Fiberglass insulation lead times have improved since the end of 2021. The manufacturers are still in tight supply. Mineral wool insulation lead times have peaked and we believe will improve in the second half of the year.
Spray foam insulation, open cell products lead times and availability have improved. Closed cell products remain in a very limited supply situation.
Again, due to raw material and transportation costs an insultation price increase in the second half of 2022 is anticipated.
ElFS – Labor issues at production plants have created very tight and inconsistent availability from the manufacturers. The industry is sold out for the remainder of 2022. Due to rising input and transportation costs, we have received a recent increase from some suppliers and anticipate others will soon follow suit with similar increases in line with those already implemented.
Our goal with these updates is to keep you informed as the year progresses. We thank you for your ongoing business and look forward to working with you for many years to come.
Sincerely,
Kirby Thompson
Chief Sales Officer