Via Metal Miner
The Construction MMI (Monthly Metals Index) held its sideways trend, dropping by a slight 1.09%. Despite a torrent of construction news, the index didn’t budge much month-over-month and had a minimal reaction to recent interest rate drops. The Fed will likely need to drop interest rates more aggressively for the construction index to display any type of significant reaction to this macroeconomic price driver.
Despite the lackluster reaction to The Fed’s more recent, dovish stance, the construction market witnessed a few significant developments month-over-month. Chief among these is China’s cancellation of the export tax rebates on both aluminum and copper products. As these two metals (mainly aluminum) see wide use in applications across the construction sector, this cancellation is having some impact on the U.S. construction market.
Another concern weighing heavily on the minds of U.S. construction firms and contractors is President-elect Donald Trump’s proposal to tariff Chinese imports. Most construction news outlets agree that the long-term outlook for the U.S. construction market could witness some volatility if these tariffs come to light.
China’s Export Tax Rebate Cancellation on Copper and Aluminum Now in Effect
China’s recent cancellation of export tax rebates for aluminum and copper products became effective on December 1, sending ripples through global industrial metal markets. According to construction news sources, this recent action by China will have significant implications for the U.S. construction sector,
It’s anticipated that eliminating the 13% VAT refund on Chinese exports of copper and aluminum will make these commodities more competitive on global markets. Therefore, analysts predict a drop in Chinese export levels, which would result in more limited global supply and pricing pressure.
While steel products were not directly affected by the recent rebate cancellations, the policy might still have an indirect impact on global steel markets. As aluminum and copper prices rise, industries may turn to steel as an alternative for some uses. This could boost demand and drive steel (and other alternative metal) prices higher. Read The 5 golden rules for sourcing metal to help avoid metal market volatility from geopolitical policy shifts.
Construction News: Implications for the U.S. Construction Sector
The U.S. construction industry relies heavily on metals like aluminum and steel for various applications, including structural components, wiring and plumbing. Rising global prices for aluminum and copper will likely elevate material costs for U.S. construction projects, potentially leading to higher overall project expenses.
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