Over the first three months of 2018, we have seen more price increases from roofing manufacturers than the last several years combined. Recently a customer asked, “Are these price increases real?” We believe 2018 is be the year inflation returns to the roofing industry, as there are several factors currently driving up prices.
Employment is at a multi-decade high, and as a result, manufacturers, distributors, and transportation companies are finding it increasingly hard to find workers. To attract labor, companies are increasing wages for incremental help, which ultimately puts pressure on prices.
Crude oil prices
Crude Oil prices have firmed above $65 per barrel—a price we haven’t seen since 2014. Since crude is the most important raw material for asphalt and related roofing products, this price increase is affecting overall costs, not only for the products, but also for the transportation bringing the products to market
Asphalt production has been curtailed due to plant shutdowns—some temporary for maintenance, and some permanent. As a result, asphalt capacity in the US has reduced nearly 10%, with the combined impacts pressuring prices.
New metal tariffs
A 25% tariff on steel and 10% tariff on aluminum have caused turmoil in the metal markets. There is potential for disruptions in supply that will ripple through the supply chain, ultimately impacting prices.
Higher transportation costs
Transportation costs are raising due to lack of availability. Truck utilization is at 100% and is projected to remain at capacity through the end of the year. Railcar utilization is at a two-year high due to increased loadings, and congestion is slowing speeds.
Given these factors, all signs point to further price increases through the remainder of 2018. Planning for these increases is the safest and best course of action. When bidding future work, please consider material costs will be 5-7% higher in the next 30-45 days, with additional price increases likely to take place in early summer. Prepare yourself and call your local ERS branch or salesperson as soon as possible to begin evaluating product options and pricing.