Over the first three months of 2018, we saw 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 the year inflation returns to the roofing industry, as there are several factors currently driving up prices.
Employment is at a multi-decade high. As a result, manufacturers, distributors, and transportation companies are finding it increasingly difficult 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 does it affect the price of products, but also for the transportation involved in bringing the products to market
Asphalt production has curtailed due to plant shutdowns—some temporary for maintenance, and some permanent. As a result, asphalt capacity in the US reduced nearly 10%, with the combined impacts pressuring prices.
New metal tariffs
A 25% tariff on steel and 10% tariff on aluminum 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 rising due to lack of availability. Truck utilization is at 100% and 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. Additional price increases are also likely to take place in early summer. Prepare yourself by calling your local ERS branch or salesperson as soon as possible to evaluate product options and pricing.