What the Data Says: 2018 Steel Costs

By Matthew Kelliher-Gibson

Whether in response to public policy or concerns about infrastructure, all of America seems to be talking about construction costs. As the leader in construction data, software and expertise, we welcome the conversation and would like to add our insight. We’ll regularly examine the long-term cost trends of the industry’s most vital materials. In this edition of What the Data Says, we’re looking at steel costs during the last three months of 2018.

A Quick Look Back

Last year, we started tracking steel costs in anticipation of announced steel tariffs. Using a steel material index in the RSMeans data construction cost database, we established steel’s long-term cost pattern of steady one percent growth on average achieved by wild quarter-to-quarter volatility. The tariffs dashed the old pattern: In Q2 of 2018 alone, the value of the index grew an astonishing 12 percent. For the first time since 2014, steel costs increased for consecutive quarters. The market had shifted into uncharted territory.

Costs escalated 13 percent in Q3, but there was reason to believe things were cooling off and the volatility was drawing to a close. The cost increase in September was the lowest since April and year-to-date prices were equal to steel’s historic growth plus the 25 percent tariff. This wasn’t so much uncharted territory as it was a sinkhole backyard: It was shocking and damaging but it was survivable.

After a long period of steel price increases, the last quarter of the year finished with a slight decrease of approximately two percent. Steel prices had absorbed the entire 25 percent tariff and costs returned to normal. We filled in the sinkhole and moved on with our lives.

Going as far back as September, 2018 steel costs flattened. It will be interesting to see what 2019 holds. Is this return to the expected fluctuations permanent or are we in for more volatility and historic increases? Check back here to see what the data says.