According to figures released by the Associated General Contractors of America, raw material prices have risen 8.1% in the past year, while the price contractors have been able to charge for new nonresidential construction has risen by only two or three percent. In other words, in this tough economy, contractors have been forced to eat most of the raw material price increases.
Diesel fuel has risen 39.4% from September 2010 to September 2011. Copper and brass mills shapes rose 14.8% over the same period. Steel mill products rose 13.5% for the year. Aluminum mill shapes rose 10.4% .
The biggest reason for these price hikes is worldwide demand for those products. AGC indicated that materials that were produced and used only in the US have not changed much in price. For example, concrete products have risen only 0.3% for the year.
These price increases are a concern for contractors and sureties. Contractors have been bidding work at very thin margins over the past three years. These raw material price increases could cut into the already thin margin.