Dear Friends,

As I write this in late June, construction in the south is still going strong, and we expect this momentum to continue for the foreseeable future. We have talked to a lot of our customers and suppliers, our leadership team has reviewed a lot of economic forecasts, and we have reached the conclusion the southern United States economy is the strongest in the country. People and companies keep moving to the southern states due to lower taxes, great weather, affordable labor, and more affordable homes and land. We also don’t see the overbuilding and lax mortgage lending standards that led to The Great Recession. We’re of the opinion that even if the south sees a recession, it won’t be deep or long-lasting. Let’s all hope we’re correct.

The recent lack of many price increases is continuing. See below for a closer look.

There was little movement on most of the commodity-based products in June, but there were signs of price increases developing towards the end of the month.

Lumber remained flat with pricing moving slightly up or down each week. Buyers remained hesitant to purchase in bulk with the recent months of a soft market. Purchases were typically made on an immediate need basis while mills and brokers tried to find the market levels. This hesitant approach persisted throughout the month, but reports of a bounce in the Western US market slowly made its way across the country. This did not have any impact on SYP in the Southeast, but it did have a slight impact on the Canadian SPF market. SPF prices continued to increase slightly each week throughout the month and the expectation is for increases to continue at least until the week of July 4^th. Lead times on loads are running 2 to 4 weeks depending on species and size needed.

Polyethylene sheeting is another commodity that remained flat. The price increase pushed through in mid-April has been full accepted by the market with orders continuing to flow into poly mills. Lead times are currently 3 to 4 weeks on straight truckloads of single size and mil, while mixed loads are taking about a week longer. There is little expectation for a decrease in cost over the next month, especially with the price of oil remaining so high.

Rebar and wire mesh, while remaining flat through June, appear to be the commodities with the highest potential for movement in July. Scrap once again posted down and both rebar and mesh mills are feeling pressure from buyers to lower costs. Wire mesh has the most potential to see a pricing correction the quickest. Even if there is a pricing reduction from the mills, the reduction may not be reflected into the market until late July or August. Many distributors are still sitting on large volumes of inventory from purchases made when lead times were extremely stretched. It appears many are/will deplete sitting inventory before restocking new inventory in any large volumes.

Rebar manufacturers also are beginning to feel pressure from brokers and distributors regarding price relief. As of now, the mills are holding firm on pricing saying demand remains extremely high and rolling schedules remain fully booked out. Import rebar has once again become a factor in the marketplace. While US domestic demand remains high, the need internationally is beginning to soften. This international softening has caused import suppliers to once again shift focus to the US market. For the first time in a while, import rebar is starting to look like a viable option for some fabricators and distributors. If import rebar can gain a foothold in the market, the mills may have to react accordingly and provide some long-needed price relief.

Contractors’ bid prices rose at roughly the same rate as their input costs for the first time since September 2020, according to Bureau of Labor Statistics data posted on June 14. However, for the month, the change in input costs in May outran the change in bid prices, implying pressure on contractors’ profit margins will persist. Specifically, the producer price index (PPI) for material and service inputs to new nonresidential construction increased 1.9% for the month and 18.9% y/y. The PPI for new nonresidential building construction—a measure of the price that contractors say they would bid to build a fixed set of buildings—rose 0.4% for the month and 19.3% y/y.

Click here for the latest update on the construction economy from Ken Simonson, the chief economist of the AGC.

Catching up with our Customers

This month’s Catching up with our Customers spotlight is of McKenzie R. Jordan, President of Chancel Construction Inc., a second generation, family-owned construction company with 50 years of construction leadership experience in the Myrtle Beach, SC market and the surrounding area. Their name is inspired by their first-ever project as a company on the chancel, or front portion, of a church sanctuary. It represents a significant milestone in their company history and serves as a metaphor of their commitment to be upfront in all that they do. To learn more about McKenzie and Chancel Construction, read more on our blog.

Featured Manufacturers

Owens Corning

Premier supplier of insulation, roofing, and fiberglass composites

Zurn

A worldwide leader in trench drain systems

Simpson Strong Tie

Connecting systems for wood, steel, masonry, and concrete

Associate Profile

Tyler Evans

Manager of Talent Acquisition

Our Associate Spotlight this month is of Tyler Evans, our Manager of Talent Acquisition. Tyler was born in Houston, TX and raised in Spartanburg, SC. He graduated from Dorman High School and then went on to the University of South Carolina, where he earned three degrees, a BA in Spanish (2013), MA in Linguistics (2016), and a Master of Human Resources (2020). Prior to joining us earlier this year, he worked at Eastman Chemical Company (2020-2022), Spartanburg County Public Libraries (SCPL) (2017-2019), and the Japan Exchange and Teaching (JET) Program (2016-2017). His hobbies are film, travel (he’s been to ten countries), languages and rock climbing. He has a long-time partner of 12 years and also a pet rabbit named Dennis Hopper. With hiring being very difficult these days, Tyler has been a very welcome addition to our team.

Our Leadership article this month is from my latest column in the Upstate Business Journal, My Top 10 Productivity Tips.  Over the years, I’ve read a lot of books and attended many classes on time management, and this article sums up the top tips and tricks I’ve learned as a result. Click here to see what works for me.

Lessons from the Trenches: My top 10 productivity tips

That’s all for this month. As always, don’t ever hesitate to let me know how we can serve you better. I’m always open to suggestions and even complaints.

Best regards,

Jim Sobeck
President & CEO 864-263-4377 (Direct Line)
jim.sobeck@newsouthsupply.com

Main Office/Branch: Greenville, SC

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Author of The Real Business 101: Lessons From the Trenches.

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