Sharp Drop in Prices for Construction Materials: What Does This Mean for the Real Estate Market?

According to Orit Shifman CEO and Founder of ARK TRADE AG the recent insights estimations generated by ARK TRADE’s AI-powered digital trading platform, the Steel, Aluminum, and Copper prices are at their lowest point since January 2022, while cost of Lumber is significantly lower than prices at the beginning of year. Orit Shifman, ARK TRADE’s CEO and Founder: “Our AI platform estimates that Steel prices will continue to be affected by the ongoing global crises.”

 

• Steel: currently traded at $618 (USD) per ton; 20.7% less than peak price and 10% less than price at beginning of 2022
• Aluminum: currently traded at $2,434 (USD) per ton; a sharp 36.7% drop from peak price and 14% less than price at beginning of 2022
• Copper: currently traded at $3.67 (USD) per pound; 25.5% less than peak price and 17% less than price at beginning of 2022
• Lumber (per 1,000 feet): Currently traded at $588 (USD) per FBM. Commonly used in home construction in the USA, prices significantly lower than at beginning of 2022

As with many other traded commodities, this year we’ve seen prices for materials used in construction and public infrastructure skyrocket. However, analysis generated by the artificial intelligence (AI) powering ARK TRADE’s digital platform, points to a significant drop in the prices of these materials, with the prices of Steel, Aluminum and Copper even lower than their price at the beginning of the year.

“ARK TRADE AI insights estimate that steel prices will continue to be affected by the ongoing global crisis,” said Orit Shifman.

Steel Rebar is a principal material for the construction industry, used for creating the base for floors and ceiling pouring, and as the base for supporting beams. The majority of trade in Steel takes place in China, where it was priced at $686 (USD) per ton at the start of 2022. By May, the price shot up to $770 per ton. Today the price is at a low $618 (USD) per ton, 20.7% less than its peak price and 10% less than it was at beginning of the year. 

Estimations at ARK TRADE claim that concerns of disruptions along Steel supply chains, and fear of subsequent rise in prices, prompted importers to place much larger orders than needed. Many of these importers are now in possession of large stocks and are reluctant to accept new orders for the material. According to insights generated by ARK TRADE’s AI, the system estimates that the parameter for ‘world crises’ which includes inflation, interest rate hikes, fear of recession, and a slowdown in real estate purchases are likely to have a major impact on the price of Steel in the near future. It in fact estimates that over 32% of the difference in price of Steel in the short term will be affected by it.

Aluminum, also used considerably in construction, especially in infrastructure and finishings, registered sharp fluctuation in price. At the start of 2022, Aluminum traded at $2,840 (USD) before shooting up 35%, to $3,850 per ton, in early March. As of August 12th, Aluminum is traded at $2,434 per ton, plunging 36.7% below this year’s peak price and 14% less than its price in January.

ARK TRADE reasons that the recent COVID restrictions lifted in China, the world’s largest consumer of Aluminum, factories have gone back to full production. Dwindling demand for the metal, used in electrical infrastructure, real estate, and the automotive industry, has caused the market to flood with Aluminum and a sharp decline in price.

Copper, also used for electricity and energy infrastructure, began 2022 at $4.42 (USD) per pound, peaking at $4.93 in March, then dropping 28% to be traded at $3.67 per pound as of August 12th, 17% less than January’s price. ARK TRADE suggests that this can be attributed in large part to the largest Copper mine in Peru going back to full production post Covid.

Lumber (per 1,000 feet) sold at $1,112 (USD) at the start of the year, reached $1,464 in March. Curiously, strong demand for housing in the U.S., where Lumber is the predominant construction material, has had no effect on its price. In fact, the current price for Lumber is $588 – significantly lower than it was in the beginning of the year.    

ARK TRADE AI Insight Estimations: Steel prices will continue to be affected by global crises.  

ARK TRADE, founded by the entrepreneur Orit Shifman, has developed a proprietary AI digital platform for global trading of commodities and finished goods. The platform gathers enormous amounts of data from around the globe, including information not used regularly by analysts, all bearing varying levels of impact on product price and availability. Therein, financial data, news reports, weather forecast, global warming, local and international politics, COVID reports, and social media are all fused, processed and analyzed. ARK TRADE has pointed out that thus far 2022 has been characterized by the heavy impact of its system’s ‘world crises’ parameter on commodity prices, such as the war and its bearing on the agricultural commodity market, or the influence of recent inflation and growing concern for a possible global recession.

ARK TRADE estimate that according to all the commodity prices checked, the ‘product price’ parameter is the leading parameter when estimating future demand. Among the many parameters scanned by ARK TRADE’s AI which are ranked as having an impact on the short-term price fluctuation in certain commodities, the system estimated that the parameter of ‘product price’ will be between 68% in Steel to 55% in Aluminum, to 40% in Copper.

That said, estimations for future prices for Steel remain susceptible to ‘world crises’, with the weight of this parameter contributing to 32% of its estimated future price, and to 22% of future prices for Aluminum and Copper. The same parameter is rated as contributing to 28% of the estimated future price for Lumber (1,000 feet).

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