FALLS CHURCH, Va., Nov. 23, 2015 /PRNewswire/ -- Growing demand from slowly recovering construction market in the US as well as a weakening Chinese economy have created a disconnect in the normal movements of pricing and demand for cold-formed steel framing and related products, according to Kathryn Thompson, CEO of the Thompson Research Group (TRG) and leading industry observer.
In a forecast prepared for the Steel Framing Industry Association, Thompson notes that the current momentum in the construction market is driving increased demand for steel studs and wallboard – a factor that normally supports increased pricing.
"However, a glut of steel from China and subtle changes in types of buildings are temporarily keeping a lid on price rises. The good news for 2016 is that the outlook for construction volumes continues to be positive. The federal anti-dumping legislation and continued calibration of production volumes by domestic mills will ensure that the steel markets remain as healthy as possible in the current environment," says Thompson.
One of the tools used by the Thompson Research Group to track and interpret market directions is the TRG Building Product Survey, which collects information and opinions from building product distributors, buying groups, and manufacturers across the U.S.
The survey finds that a recovering US construction market is also creating bottlenecks in many areas, including labor shortages from truck drivers to drywall installers, delays in getting project permits, shortages in concrete and architectural glass, and even contractors who are being much more selective about the projects they bid on.
- Multi-family remains a big driver for non-res construction demand in the current cycle.
- New construction will be the key driver in both residential and non-residential construction markets, with growth between 7 and 10 percent.
- The survey also finds that 75% of the steel stud respondents report that volumes have been up over the past 60 days and trends throughout the third quarter of 2015 have been overwhelmingly positive.
- Also surveyed wall board manufacturers and suppliers where 80% of those responding to the survey report that volumes have increased between 2-5%.
- By the end of 2016, however, the survey finds that the passage of a Federal transportation bill would lift public construction from an otherwise flat or lackluster performance.
- Architect contacts remain very busy – this does not appear to be changing in the next 6-9 months. This is prospective at least for the next 12-24 months.
"The primary risk here is introduced by the global markets. It's a year for vigilance. One where growth while not explosive will improve at a steady pace," reports Thompson.
Larry Williams, Executive Director of the Steel Framing Industry Association and host of the forecast adds "For the nimble and informed, 2016 is a year of opportunity. The prospects of real growth in the coming year presents to all those who manufacture, distribute and install steel framing with the best opportunity in nearly a decade to increase the use of our products. At SFIA, we will continue to work as the driving force for our industry."
To access the 2016 Market Forecast For Cold-Formed Steel Framing webinar, please contact [email protected].
Steel Framing Industry Association
The SFIA represents more than 1,300 members, including steel mills, coil coaters, processors, roll-formers, fabricators, engineers, material distributors and framing contractors. Its 24 Stud Manufacturer members produce two-thirds of the cold-formed steel stud and track used in the US. SFIA promotes using cold-formed steel framing, advocates pro-industry codes and standards, conducts seminars and supports competiveness through innovation. SFIA provides statistical and trend data for the industry regarding safety, steel usage and prices. For more information, visit http://www.cfsteel.org/.
Thompson Research Group
Thompson Research Group (TRG) is an independent equity research and consulting firm focused on the construction and industrial industries. Our true industry expertise and financial acumen allows us to identify industry inflection points and secular trends early. We translate industry information into actionable stock ideas, benefitting clients with alpha generating investment ideas.
SOURCE Steel Framing Industry Association