War in Ukraine Forecast to Impact Industry Prices, Supply Chain

March 1st, 2022 by Travis Rains

The war in Ukraine and subsequent responses from the West are anticipated to have multiple effects on the cost of construction materials and their availability, according to information gathered this week from the Associated General Contractors of America (AGC). Immediate impacts are projected for diesel fuel and gasoline prices.

The AGC culled information from various sectors including the Energy Information Administration, who reported an average national retail price of $4.05 per gallon for on-highway diesel fuel on Monday, February 21. That equates to a 36% year-over-year increase, or $1.08, which the news release noted is the highest level in almost nine years. In just a few days, by Thursday, February 24, the future price for heating oil, which the AGC release notes is a close proxy for diesel fuel, jumped 12 cents per gallon over the course of the week.

Furthermore, the Wall Street Journal reported on Wednesday, February 23 that cargo ships in the region have been halted or delayed. With Russia being an “important producer of copper and aluminum,” difficulty in securing those materials could result in new disruptions to already strained supply chains.

And New South Construction Supply, cited in the AGC release, reported on Wednesday that the lumber market continues to struggle with supply-chain disruptions.

“Low sitting inventory at mills and extended lead times on shipments are back to being the norm. Pricing continues to climb as availability continues to decline,” New South reported, adding that import lumber typically used to offset domestic supply chain issues is experiencing constraints as well.

Logistical and transportation issues at the ports also persist, according to AGC, with many inbound loads of European spruce-pine-fir arriving at their destinations weeks after what was promised. These issues are forecast to remain for the next four to five weeks.

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