Examining factors that could affect the prices of lumber and steel.
Many factors play into the pricing of sheds and other portable structures, but the cost of building materials has a major impact.
Whether you use lumber or metal in your sheds, it’s important to have an idea about how the prices of the materials will fluctuate to help mitigate costs.
Lumber Goes Back In Time
Softwood lumber has become somewhat of an anomaly regarding material prices in recent months. While most construction materials have remained high since 2020, lumber has settled back down to pre-pandemic prices.
That’s largely due to a depressed housing market caused by high interest rates, says Anirban Basu, chairman and CEO of Sage Policy Group, an economic consulting firm in Baltimore. The residential market is by far the biggest consumer of lumber products, and demand has been down.
“A lot of lumber is utilized in construction,” Basu says, “and elevated interest rates have really caused single and multifamily construction to decline.
“The demand for lumber, as a result, is significantly depressed. That’s played a huge role in the price decline.”
Nevertheless, Basu worries that the Canadian lumber market could soon be targeted with tariffs of their own, like those imposed on steel and aluminum imports from China.
“Americans import about 25 to 30 percent of their lumber, virtually all from Canada,” Basu says, “and there has been a four-decade conflict between the Americans and Canadians over softwood lumber.”
Canada is one of the world’s largest producers and exporters of softwood lumber. According to the College of Natural Resources at North Carolina State University in Raleigh, in 2023 the U.S. imported some 28.1 million cubic meters of softwood lumber from Canada, primarily for residential and commercial construction.
As such, any tariff would have a significant impact on U.S. prices.
“Tariffs unequivocally work toward pushing domestic lumber prices higher,” says Rajan Parajuli, an associate professor of forest economics and policy at N.C. State in a January press release. “When that happens, it usually adds up to higher costs for consumers.”
Even if it doesn’t happen, the uncertainty caused by current trade tensions could cause Canadian suppliers to hit pause on any future investments in capacity.
“That causes businesses who would otherwise expand to not expand, causing a reduction in supply,” Basu says.
Aug 2024 Oct 2024 Dec 2024 Feb 2025 Increased Price 9% 15% 9% 21% No Change in Price 72% 80% 86% 74% Decreased Price 19% 5% 5% 5%
“When an industry isn’t adding capacity as it would normally, that tends to put upward pressure on prices.”
Lumber prices have a history of being volatile. During the pandemic lockdown and ensuing supply chain issues, lumber mills had difficulty finding saw blades and other equipment, which led to a significant ripple effect on the supply chain.
As a result, in 2020-22, lumber became one of the more extreme examples of supply chain malfunction. According to the U.S. Bureau of Labor Statistics’ Producer Price Index (PPI), softwood lumber prices increased by a whopping 68 percent during that time.
Fortunately, that’s no longer the case, says Matt Housworth, president of Southeastern Portable Buildings in Eatonton, Georgia. His sheds are manufactured with wood frame structures, wood floor joists, studs, and plywood.
“It shocks people when I tell them that lumber prices are back to pre-pandemic prices,” Housworth says.
He says the drop in prices has helped him to better manage increases in other materials, principally steel.
“There have been major price increases (in lumber) in the past, but we’ve seen lumber go back down and our profit margins increase as a result,” he adds. “So, when we see an increase in steel, we don’t have to immediately increase our prices because we already have that buffer.”
Housworth’s sales, however, have slowed a bit in recent months, which he attributes to general inflationary pressures and over-saturation in the market.
“We saw some accounts lose as much as 40 percent of their sales, but I attribute some of that to the market returning to a pre-COVID normalcy,” he adds. “During COVID, our business went through the roof. At one point, I had a standing order for over 900 buildings.”
Material price increases overall have slowed somewhat over the last year, and that’s good news for shed builders. Construction input prices decreased 0.2 percent in December compared to the previous month, according to recent PPI data. Nonresidential construction input prices also decreased 0.2 percent for the month. Overall construction input prices are 0.9 percent higher than a year ago.
No matter what the future holds, Housworth feels his company can weather most economic storms. He builds sheds for 41 retailers across Georgia and the Carolinas, and those areas have been resilient during previous economic downturns.
“We noticed when the economy crashed in 2007, the Carolinas were the last states to go down in sales,” he adds. “That’s how we built up our business … by going after those areas.”
Steel Prices Remain High
Steel and aluminum prices surged exponentially in the immediate aftermath of the pandemic and continue to remain as much as 44 percent higher than early 2020 prices, according to the U.S. Bureau of Labor’s Producer Price Index (PPI).
That’s decidedly bad news for shed builders, or any other manufacturer or contractor for that matter, as steel and aluminum prices are likely to increase should the recently announced tariffs on steel and aluminum imports continue for months, or even years.
On Feb. 10, President Trump imposed 25 percent tariffs on steel and aluminum imports from all U.S. trade partners, effective March 12, primarily as a crackdown on subsidized Chinese metal that is flooding global markets.
Basu says unfortunately the price of steel and aluminum is “still up massively high when compared to pre-pandemic levels, and the tariff will put high costs on top of already high costs.”
That’s being further exacerbated by an increase in the demand side of the equation, primarily in the industrial and manufacturing sectors.
“The data center market is booming, and they use massive amounts of steel,” he adds, “so that has kept demand for steel higher than it otherwise would be. And we’re also building a large number of manufacturing facilities across the country, including semiconductor manufacturing plants. Energy is yet another high-demand market.”
Basu says while it’s true that the tariffs are targeting imported steel, it will have a ripple effect on the rest of the market.
“These domestic producers are generally publicly traded companies, and they’re trying to maximize shareholder value,” he says. “The way to do that is to maximize profits, which you do by charging the highest price that the market will bear.
“And if competitors are facing a 25 percent tax, they now have the ability as a domestic producer to raise their own prices and raise them as much as they can.”
It would have been even worse had prices not declined by 11.4 percent in the last year after China flooded the market with product.
“China has built these massive cities that use a lot of structural steel,” he adds, “but recently they’ve found themselves in a real estate crisis. Developers can’t line up financing and they’re fading out of business. As a result, the steel has to go someplace so they send it into the global markets. That causes the price to fall.”
Still, if the tariff remains in place there will be “quite a meaningful increase” in steel prices in 2025 Basu says.
“The tariffs will significantly alter the price dynamics of the industry,” he adds. “In other words, the expectation for steel prices has likely changed.”
That could have significant ramifications for the shed builders.
“All things being equal, that’s not good for the industry,” Basu says. “There are two types of players in the steel industry—there are the domestic steel producers, who benefit from the increase, then there’s everyone else—foreign producers of steel, users of steel, etc.—and those groups will suffer.”
Housworth says he’s accepted the high steel and aluminum prices as the new normal in a post-COVID world. Most of the buildings he manufactures require metal and aluminum siding and roofing.
However, he says he’s not particularly worried about the impacts of the tariff.
“Even if I thought it was going to be a two- or three-year struggle and wanted to invest in stockpiling product at today’s rate, the manufacturers would limit how much I could buy based upon their inventory,” he says. “But I don’t see this as being long-term. I think it’s in the best interest of these other countries to make a deal.”
Regardless of the ups and downs in material prices, Housworth adjusts prices only once a year, then only when necessary. When possible, he absorbs material price increases in order to remain competitive.
“We have a certain profit margin that we maintain on every product that we sell, but if steel goes up 3 percent that doesn’t necessarily mean we’re going to have a price increase right away,” Housworth points out.
“However, if it’s coupled with other price increases on other products, and I hit a certain threshold, that’s when I move pricing.”
He typically performs a cost and overhead analysis each January and February, then checks his profit margins to determine if price adjustments are necessary.
“Certain times of the year, steel prices go up and sometimes they go down,” he adds. “I’ve seen it move as much as 20 cents a foot in just a month, but if you’re too reactive with the pricing your salespeople can’t do their jobs. So, you have to do the best you can.”
