[ferro-alloys.com]Prices for construction materials in Mexico were 10.3% higher in 2018 than 2017, driven mainly by steel products, the Construction Industry Chamber said Thursday.
"The general level of prices for the construction industry registered in 2018 its highest mark of the last 10 years, reaching an annual growth of 10.3% ... mainly by the increase in the cost of construction materials, which recorded on average an increase of more than 11.3%," CMIC said.
"During 2018, the sustained growth in the prices of construction materials was influenced by the increase in the prices of steel products," CMIC said.
Long steel products such as rebar (29.4%), wire and wire rod (27.5%) and steel mesh (18.1%) topped the list in December of products with the highest annual price variations, behind only asphalt and other chemical products.
CMIC does not report market values or a value for the index, only the percentage change. Data comprises both housing and infrastructure costs.
"In the event that the Ministry of Economy does not succeed in the petition to the US government to cancel tariffs on steel and aluminum, the pressures on construction prices will continue during 2019," CMIC said. "Likewise, it is necessary to resolve the supply problems as soon as possible -- since it would not only negatively affect the performance of the construction industry, but of all the national economic activity as a whole," it said, referring to the US 232 tariffs of 25% on steel products and 10% of aluminum products against Mexico and Canada.
"In the current circumstances, we expect a scenario in which the general price level for construction will be between 8% and 9% in 2019, with a growth in its productive activity from 2% to 2.5% during the present year," CMIC said.
CMIC reiterated that trade tensions with the US and consequent imposition of import tariffs from both sides provoked an additional hike in prices of construction materials of about 3%-4%, "which would take the annual inflation on the Mexican construction sector to 12%-18% in 2018, depending on the sector," it said.
It said that prices of construction materials continued to rise and had a negative impact on the growth rate of the construction industry's productivity, bringing it closer to 1%-2% of annual growth.
In 2017, after three straight years of growth, the construction industry contracted 1%.
(S&P Global Platts)