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Steel and aluminum prices have increased abruptly since the New Year’s turn, and more volatility could be on the horizon.
The contractors are preparing a new wave of rates that will take effect on April 2, this time on certain materials imported from Canada and Mexico, such as steel, aluminum and wood. Although reports indicate that Trump’s administration could go back to the final scope of this action, contractors say only Threat of rates It can have an immediate impact on the costs of the materials.
Therefore, this period of Canadian and Mexican imports has already caused concern to the entire construction industryParticularly around reinforcement and structural steel, Curtain and Canadian wood systems, Steve Stouthamer, executive vice president of project planning for the Skanska USA building.
Here, Stouthamer talks with construction of construction on the most at -risk materials, the impact of rates on budgets and negotiations and steps that contractors can take to minimize financial exposure.
This interview was published by brevity and clarity.
Construction division: What construction materials do you expect will see the volatility of the largest prices due to the rates?
Steve Stouthamer: The materials that affect the most are products made with steel and aluminum.
For example, the reinforced steel used in concrete, a structural steel used in the building frame, the aluminum curtain systems and the window wall that are used in the building’s wrap, the pipes and ducts used in mechanical and electrical systems, and many mechanical and electrical equipment components of the building.
Steel prices have increased 15% and 25% since the beginning of January and aluminum has also increased from 8% to 10% since the beginning of January. The Trump administration has indicated that the Canadian wood will be included in the reciprocal rates that will have an effect on April 2. Lumber has already experienced a significant increase, from 10% to 15% of the cost, in anticipation of this rate.
How can these rates affect the costs and deadlines of the project?
We are in the early stages of helping our clients understand the order of magnitude costs that we see based on current rates and will vary depending on the type of project and the material composition of these projects.
At present, we do not expect a short -term impact on the project periods. If there is a considerable change in the manufacture of works, the schedules of the supply chain could be restricted, but it is not like the situation we experienced during the pandemic where the supply chains were affected by global shutdown.
Steve Stouthamer
Courtesy of the Skanska USA building
Currently, the widest rates in Mexico and Canada on products protected by the United States-Mexico-Canadian agreement are suspended until April 2. After the resumption, it is our current understanding that 25% of wide rates in all merchandise in Mexico and Canada would be stacked at the top of the steel and aluminum rates throughout the country of 25%, which resulted in 50% taxes.
With the last fare suspensions, it is not clear if it will ultimately be the case. We will supervise the situation in the coming weeks.
How do you see that the rates affect the negotiations with owners and developers?
The impacts of expense costs will pressure the project budgets. Many of these are already challenged by the important period of post-paid experience.
We meet only a few weeks on executive fares, so it is too early to comment on how contracts will be seen or negotiated. Our approach will be to relate to our customers and discuss the most profitable ways of managing tariff risks.
Do you expect trouble problems to be temporary or a long-term factor that construction companies have to adapt permanently?
It’s too soon to comment.
The story suggests that even when the rates are eliminated and commercial agreements are reached, costs not only return to previous levels.
What politics or efforts in the industry can help mitigate the impact of rates on construction companies?
Estimation professionals will need to take deeper dives to their projects to understand the volumes, sources and the fare impact of products to help customers better understand the financial impacts of alternative rates and products and potential products sources.
Strategic supply teams, such as ours in Skanska, will need to keep themselves closely connected to the supply chain and major steel manufacturers and aluminum products, as well as other key construction materials that will affect the rates. It is essential to have this connectivity so that companies like ours can continue to advise clients and partners in the industry on the best strategies to mitigate the impact of rates.
The projects can benefit the additional time in the map of the materials specified for the project to determine their source, if these sources have an impact on rates and if alternative products and sources could mitigate the financial risk.
