Mixed impacts from Hurricane Katrina on supplies of construction inputs are continuing to appear. AGC CEO Stephen Sandherr on Friday wrote to Commerce Secretary Carlos Gutierrez to urge an immediate suspension of the anti-dumping duty on Mexican cement to ease shortages worsened by the closure of ports that accounted for 12% of U.S. imports in the first half of 2005. Sandherr also wrote to oppose quotas, which Commerce was reported to have proposed to Mexican negotiators in talks on Tuesday. Several contractors reported to AGC that prices for PVC pipe had doubled overnight; one said his supplier warned of a further 100% increase at the end of the month. Shortages appeared likely for resins used to make a variety of construction plastics, because oil and natural gas production in the Gulf and refinery operations onshore are still far below pre-storm levels. Shortages of galvanized steel may result from the closure of a plant that produces half of nation's hydrogen. In response to continuing shortages of low-sulfur, undyed highway diesel fuel, the Internal Revenue Service and Environmental Protection Agency extended until October 5th the waiver that allows production, importation and use by highway vehicles of high-sulfur, dyed fuel. (See www.irs.gov and www.epa.gov for conditions.) But futures prices dropped for crude oil and gasoline in the face of weakening demand and the release of supplies from U.S. and foreign strategic reserves. One steel supplier told AGC that an expected October 1 increase in steel prices had been trimmed to $20 per ton from an earlier $30-40. With an estimated 150,000 ruined vehicles in Louisiana and Mississippi, there could be a surge in scrap steel supplies. Wood products prices may fall below levels that would have occurred in the absence of Katrina if the millions of trees that were knocked over by the storm can be harvested and the region's lumber mills be brought back into service in time.
The impacts on demand for construction activity are less clear. Although President Bush pledged Thursday night to support rebuilding of New Orleans, it is too early to tell how much of the city must be cleared and demolished first, what steps need to be taken to make rebuilding safer, and how it will be paid for. A Washington Post survey of refugees in Houston found only half intend to return, implying there will be more demand for construction in states where refugees, businesses, or activities such as conventions move to.