IBIS WORLD has discovered that building materials, specifically drywall and copper pipes, have been experiencing extreme drops in prices in recent years.
Jesse Chiang, writing for IBIS WORLD, discuss the building materials' volatilities:
Drywall prices have grown at a significantly slower pace since 2014 due to limited gains in private nonresidential construction, which have been hampered by declining corporate profit. This slower growth has been a volatile shift from substantial increases in price in previous years. Slowing increases in the price of gypsum, the primary material used to make drywall, has also led to slower price growth. As a result, buyers are advised to engage in contracts to limit price growth and to leverage a larger total value to keep costs down.
The price of copper pipes and tubes has fallen with significant volatility in 2016, largely driven by substantial declines in copper prices. Weaker demand for copper has resulted in an oversupply, which has led to steep price drops. This trend is particularly important to copper pipe prices because raw copper accounts for an estimated 59.3% of revenue for the average copper pipe and tube supplier. Accordingly, the 15.1% drop in world copper prices expected in 2016 will result in the average price of copper pipes and tubes falling 10.3%. However, IBISWorld forecasts that this trend will reverse in the three years to 2019 due to rebounding copper prices, further contributing to the high level of price volatility for copper pipes and tubes. Buyers should therefore seek contracts to lock in prices now before they increase.
To see how price volatility has impacted other industries, such as fuel and technology, follow the link below.