Global Construction Consultancy firm Linesight sees Flattening Commodity Prices in 2023, with Inflation and Energy Prices Preventing Declines

Risk mitigation and smart procurement remain essential as an anticipated recession, growing demand for materials, construction labor shortages, and policy shifts in China will create volatility despite supply chain improvements

NEW YORK--(BUSINESS WIRE)--Global construction consultancy firm Linesight today released new data indicating the likely leveling of prices in key commodities markets in 2023 as supply chain disruptions ease and logistics return to pre-pandemic efficiencies. However, the company’s Q4 Commodity Report warns that continued inflation, a predicted economic downturn, and China’s new stance on COVID safety will keep prices high for the rest of the year. Economic recovery remains slow in the United States, and the construction industry is expected to shrink by 7% in 2023.

Patrick Ryan, Executive Vice President for the Americas at Linesight, says, “This contraction is worse than the previous estimate of 4.3% because growth is being hampered by high input costs, rising interest rates, inflation, and supply chain issues. While demand for most key commodities in the United States is expected to ease in the coming year, rising input costs, high energy prices, and other challenges are expected to offset this. On the bright side, investments by the government in housing, transportation, and manufacturing through 2026 should stimulate growth at an average annual rate of 3.7%.”

Among the key findings in the report are:

• Economic slowdown is expected to continue into 2023
• Inflation is cooling off (6.2% in 2022) but will remain higher than normal, with an average of 4.7% expected for 2023, and will continue to push wages higher
• The rate of unemployment is low, but is expected to increase in the next few months due to lower economic sentiment and reduction in spending, though this should not affect the cost of labor for mission-critical and life sciences work, where a shortage of skilled labor will continue
• From an equipment standpoint, short supplies of electrical steel are causing issues with transformers
• Rising demand for aluminum, copper, and nickel will drive prices up on electrical and construction projects
• Interest rates and recession fears may apply downward pressure on copper prices in the short term, but this will be offset by investment in the transition to clean energy

“China’s relaxation of its zero-COVID policy is expected to drive demand for commodities globally, helping to maintain elevated commodity inflation rates,” says Ryan. “With the market unsteady and even as it slowly recovers, risk management and smart procurement are just as important as ever. Commodity prices have still not returned to pre-pandemic levels, and the skilled labor shortage is ongoing, so companies looking for an edge in the current volatile market should seek the best and most knowledgeable consultants available. President Biden’s new Buy American policy for Infrastructure Construction, announced this week in his State of the Union address, is likely to have an impact on commodity pricing, increasing demand for certain commodities, though this impact is uncertain and should be monitored over the next year.”

To request the full report, please click here.

About Linesight

Linesight is a multinational construction consultancy firm with over 48 years’ experience, providing cost, schedule, program, and project management services to a multitude of sectors including Life Sciences, Commercial, Data Centers, High-Tech Industrial, Residential, Hospitality, Healthcare, and Retail. Linesight’s specialist project teams, each with specific skills and experience, provide better predictability of project outcomes, faster project delivery, greater cost efficiency, and maximum monetary value for its clients. For further information, please visit http://www.linesight.com.