Disconnect in pricing, demand will affect 2016 cold-formed steel framing market

Growing demand from the slowly recovering U.S. construction market, as well as a weakening Chinese economy, has created a disconnect in the normal movements of pricing and demand for cold-formed steel framing and related products, according to Kathryn Thompson, CEO of the Thompson Research Group, Falls Church, Va.

In a forecast prepared for the Steel Framing Industry Association, Thompson notes that the current momentum in the construction market is driving increased demand for steel studs and wallboard—a factor that normally supports increased pricing.

"However, a glut of steel from China and subtle changes in types of buildings are temporarily keeping a lid on price rises. The good news for 2016 is that the outlook for construction volumes continues to be positive. The federal antidumping legislation and continued calibration of production volumes by domestic mills will ensure that the steel markets remain as healthy as possible in the current environment," said Thompson.

The forecast also indicates that new construction will be the key driver in both residential and nonresidential construction markets, with growth between 7 and 10 percent. Seventy-five percent of the steel stud respondents reported that volumes have been up over the past 60 days and trends throughout Q3 2015 were overwhelmingly positive.

By the end of 2016, the passage of a federal transportation bill would lift public construction from an otherwise flat or lackluster performance, the forecast says.

Larry Williams, executive director of the Steel Framing Industry Association, said, “For the nimble and informed, 2016 is a year of opportunity. The prospect of real growth in the coming year presents to all those who manufacture, distribute, and install steel framing the best opportunity in nearly a decade to increase the use of our products.”