Understanding Price Volatility in Construction Materials: Wood, … · 2020-05-13 · Growth &...
Transcript of Understanding Price Volatility in Construction Materials: Wood, … · 2020-05-13 · Growth &...
Understanding Price Volatility in Construction Materials: Wood, Steel, Aggregate
Blake Hoskisson , President , Sunsteel
Dall in Brooks, Execut ive D irector, Western Wood
Preservers Inst i tute
??? Aggregate Guy ???
Can’t We All Just Get Along?
Wood
Steel
Concrete
Plastic
Maybe We Can
Wood Guy
Steel Guy
Why Do You Care?
Who are You?
Do you really care about daily price Fluctuations?
Do you have any Choice?
The Whole Picture
The Global Economy
Global Manufacturing
Insurance
Industry Manufacturing Process
◦ Steel
◦ Aggregate
◦ Wood
Labor
Environmental Impact
Global Supply Chains are Reacting to China-US Trade Dispute
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US Imports of Goods from China US Imports of Goods from Vietnam
Year-over-year percent change
Borrowed Slide
Global Manufacturing Sector Has BeenDeclining Since Late 2017
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Breakeven
Markit Purchasing Managers' Index Excluding US
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Purchasing Managers’ Indices Show Manufacturing Sector is Slowing
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New Orders
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Source: Institute of Supply Management
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The 2018 Level of Housing Completions Was Typical of a Recessionary Low in Previous Economic Cycles
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Annual Level of Housing Completions, Millions
Borrowed Slide
Oil, Gas and Energy
Insurance Rates Based on Material
Material Ins. Rate Premium % Bldg. Cost Ins. Cost/yr Ins 50 yrs Total Cost
Wood $ 0.24 $ 2,000,000 $ 4,800 $ 240,000 $ 2,240,000
Concrete $ 0.16 4% $ 2,074,074 $ 3,319 $ 165,926 $ 2,240,000
Steel $ 0.11 6% $ 2,123,223 $ 2,336 $ 116,777 $ 2,240,000
Steel, ENR 20 City Average
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Rolled Steel, $/cwt
Fabricated Steel: Consider the “All In Price”
Installed Steel:
$1.50 to $2.00/cwt
Airline Comparison
https://skyrefund.com/en/blog/airline-industry-price-wars
Aggregate, 20 City Average
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Base Course Aggregate $/ton
Wood Products are SustainableInputs
Seed
Soil
Water
Sun
CO2
Outputs
Oxygen
Habitat
Stored Carbon
Mature Forest
Wood Products
Page 16
30-80 years of
forest management
Preserved wood products are more sustainable
30-80 years of
forest management
A replacement has grown in the 30-80 years of
expected product life span
WWW.PRESERVEDWOOD.ORG 360-693-9958
Lumber Prices to Trend Upward
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2&Btr 2x4, Western SPF $US/MBF
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Wood Prices Last Two Years by Month
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Mills Were Losing Money On Cash Costs
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Cash Cost Profit Average Sales Price*
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*After deducting duties for Canadian Mills
Borrowed Slide
The Last Time Prices Were This Low, We Saw Significant Curtailments And It Has Begun Again
US West
6/6/2019 Manke 1 Mill
5/31/2019 F.H. Stoltze 1 Mill
5/1/2019 Saratoga FM 1 Mill
2/26/2019 Swanson 1 Mill
12/11/2018 Rosboro 2 Mills
12/11/2018 Saratoga FM 1 Mill
12/6/2018 Schmidbauer 1 Mill
11/28/2018 Swanson 1 Mill
11/14/2018 Rosboro 1 Mill
11/13/2018 Swanson 1 Mill
11/8/2018 Seneca 2 Mills
Canada
6/5/2019 Tolko 2 Mills
6/3/2019 West Fraser 5 Mills
6/3/2019 Conifex 2 Mills
6/4/2019 Canfor* Vavenby
5/31/2019 Aspen Planers Remove 1 shift
5/25/2019 Interfor All BC mills
5/23/2019 Tolko 2 Mills
5/16/2019 West Fraser 2 Mills
5/10/2019 Western 1 Mill
5/1/2019 Conifex 2 Mills
4/25/2019 Interfor All BC mills
4/24/2019 Canfor All BC Dimension mills
*Permanent
Borrowed Slide
The South’s Softwood Sawtimber Inventory Will Continue Expanding in the Near Term
Growth & Drain, BBF Int’l ¼” Inventory, BBF Int’l ¼”
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Growth In Chinese Demand Is SlowingNorth American Overseas Wood Exports
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China Imposed Tariffs on US Softwood Log and Lumber
SYP log: 25% tariff
Hemlock log, 15cm+: 5% tariff
Douglas fir log, 15cm+: 5% tariff
Hemlock log, <15cm: 20% tariff
Douglas fir log, <15cm:20% tariff
Spruce log:20% tariff
Douglas fir lumber, SYP lumber, Hemlock lumber: 20% tariff
Is Mass Timber the Wave of the Future?
What are the different types of mass timber panels?
CLT - Cross Laminated Timber NLT - Nail Laminated Timber DLT - Dowel Laminated Timber
MPP – Mass Plywood Panel TCC – Timber-Concrete Composite Timber
The dominant mass timber panel product is CLT
Illustrations courtesy of Structurecraft
Steel, Wood and Concrete: the devil is in the details
STAGE 1 - STEEL FRAMING STAGE 2 - CLT FLOOR PLANKS STAGE 3 - CONCRETE TOPPING
STEELCOLUMN
END PLATECONNECTION
BUILT-UPSTEEL BEAM
CROSS-LAMINATEDFLOOR PLANKS
CONCRETETOPPING SLAB
SLABREINFORCING
COMPOSITEFLOOR SCREW
Why has offsite construction been gaining ground globally?
• Construction-labor productivity is very poor.
• Severe shortages of skilled onsite construction labor.
Circa 1940s Circa 2016
Agriculture
Manufacturing
Retail
Construction
Land assembly and automation for scale
Advanced bioengineering
to increase yields
Entirely new concepts of flow
Modularized and standardized designs
Aggressively automated to increase
production
Utilized scale advantages and cutting
edge logistics to provide affordable goods
to the masses
Limited improvements in technological
capabilities, production methods, and
scale
Key advances
1 Cumulative real growth in the United States, %, 1947-2010
Productivity Growth1
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The Construction Industry Has A Terrible Productivity Record
Borrowed Slide
Employment in Residential Construction Has Stalled Even as the Unemployment Rate for Construction Workers Has Plunged
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Thousands, SAUnemployment Rate in
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Labor
"greatest innovation in residential construction is the invention of the nail gun“
Labor shortage isn’t just about contractors it is about their suppliers too.
North American is Only Major Economy With Growing Working-Age Population
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Population Aged 15-64, 2015=100
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Source: UN Population Division, Estimates and Medium Variant Forecast
North America
Europe
Borrowed Slide
Wood, Steel and Concrete Hybrid Construction
The Right Material for the Right Applications
We Expect CLT Consumption Growth to Average 29%/year through 2023
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Base Case 000 m³ Upside 000 m³ Downside 000 m³
000 Cubic Meters Million Board Feet
Source: FEA
Borrowed Slide
Mass Timber Panel Projects Built &/or Started Since 2010
Source: WoodWorks, FEA
Borrowed Slide
Mass Timber Panel Projects Built &/or Started Since 2010
Business45%
Student Housing21%
Assembly11%
Educational7%
Hotel/Motel6%
Multi-family5%
Other5%
US Mass Timber Panel Consumption by Building Occupancy, 3-Year Average
2016-2018
Source: WoodWorks
Borrowed Slide
Wood- Natures Steel and Concrete
Made up of Tiny Straws.
◦ Pound for pound stronger than steel
Wood
First Board Installed On Every House
◦ Preserved wood Sill Plate
◦ Chemical protect the rest of the wood.
Mistakes Can be Made
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Industries
• After the Berkley deck collapse, rather than requiring preserved wood, construction industry advocated and passed requirements for a drain under “impervious barrier” over wood
Economic Cycle Forecast
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Borrowed Slide
Housing Start Profile
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Sources: US Bureau of Economic Analysis, FEA
Borrowed Slide
Did We Get Along?
Wood Guy
Steel Guy
Concrete and Plastic
Life Cycle of Steel
• Enough steel is created each day to build 548 Eiffel Towers
• 217 kg of steel, on average, is used in new products per person
globally
• 8 million people work in the steel industry
You have a choiceWood Guy Says Steel Guy Says
Embodied Energy (per the “Wood Guys”):
• Concrete: 12.5 MJ/kg
• Steel: 10.5 MJ/kg
• Wood: 2.0 MJ/kg
• Steel/Wood Factor 10/2 = 5
Case Study- 16” deep member w/ 40’ span
Glulam- (2) 8 ¾” x 16 ½” at 70 lb/ft
Steel- (1) W16x45 at 45 lb/ft
Steel/Wood Wt Ratio: 45/70 = 64%
Adjusted Factor 5 x 64% = 3.2
For wood add: fire-retardant, paint, pesticide, etc.
For steel add: recycled content, paint, fire-proof
Thank You For Your Time
Dallin Brooks
Executive Director
Western Wood Preservers Institute
12503 SE Mill Plain Blvd. #205
Vancouver, WA 98684
(360)693-9958
www.PreservedWood.org
Blake Hoskisson
President
SunSteel LLC
312 SE Stonemill Drive, Suite 147
Vancouver, WA 98684
(360 )329-7048 |
www.SunSteelllc.com