Metal prices start to level off
Published: 04 May, 2009
UK: The first quarter of 2009 saw the decline in the price of metals ease off from the dramatic falls seen in the last three months of 2008, according to BDO Stoy Hayward's Construction Commodities Index. The price construction firms paid for aluminium, copper, lead, tin and zinc in Q1 all fell at a much lower rate than the price paid in Q4 2008. The only exception was steel, which declined at 1.5 times the rate it did last year.
Richard Kelly, head of construction, at BDO Stoy Hayward commented: "The construction sector has had to try and wear significant price hikes over the past 12-18 months which, coupled with the downturn in the global economy, have nearly crippled the sector. The fall in metal prices, although not as dramatic as the previous quarter, will still come as a welcome relief to the sector.
"Looking at the bigger picture, the results suggest that metal prices are starting to show signs of easing.
"It would be too optimistic to state that these are the first signs of 'green shoots in the construction sector' as demand for metals and construction projects increases, but they could be among early indicators that the market is beginning to level out," he continued.
Copper shows biggest sign of recovery
The commodity showing the biggest sign of recovery during the quarter was copper, which showed a fall of only 1% compared to a fall of 51% in Q4 2008 - a fall of 50 percentage points).
This was followed by lead, zinc and tin (down 35, 34 and 27 percentage points respectively)
Aluminium moved the least, falling by only 10 percentage points, whereas steel prices increased by eight percentage points during the quarter.
"Copper is often seen as one of the bellwethers of the economy - when it levels off or increases then economists start to get excited," said Mr Kelly.<
"The price of copper has slowly been increasing throughout the quarter, breaking through the US$4000 mark for the first time in nearly five months. If the weakening dollar continues apace and the Chinese continue to re-stocking their supplies for construction, then we could well be seeing a positive effect on the UK's construction market in the near future," Mr Kelly concluded.