Steel prices have risen by 4% in February for U.S. construction companies, with tariffs playing a significant role, according to analysis by Associated Builders and Contractors (ABC) using data from the U.S. Bureau of Labor Statistics' Producer Price Index.

Overall, construction input prices saw a 0.3% increase compared to the same month last year, while non-residential construction input prices experienced a slight 0.1% decrease. However, iron and steel prices saw a notable month-on-month increase of 3.9%, despite being down 13% year-on-year. Steel mill products also rose by 2.7% month on month, but were still down by 18.9% when compared to the same time last year.

Softwood lumber, on the other hand, saw a 2.8% rise month on month and a 10.9% increase year on year.

ABC’s chief economist, Anirban Basu, commented on the rise in non-residential input prices, stating, “Non-residential input prices increased at a rapid pace in February and have risen at a far-too-hot 9.0% annualized rate through the first two months of 2025.”

He attributed the sharp increase in iron and steel prices to tariffs, saying, “Iron and steel prices rose at a particularly fast rate in February, a result of tariffs providing domestic producers with increased pricing power.” Basu went on to explain that while non-residential input prices have risen, they are still lower year on year, but this trend is expected to shift in the coming months. “Despite the sizable increase over the past two months, non-residential input prices are still down on a year-over-year basis. That will likely change in the coming months as tariffs continue to put upward pressure on prices.”

Despite these rising costs, members of ABC remain optimistic about their profit margins, as shown by the ABC’s Construction Confidence Index. When surveyed about their profit margin expectations, 39.3% of ABC members reported that they expected an increase in the next six months. However, the share of members expecting a decrease in profit margins rose to 23%, marking the highest share since October 2024.

• The increase in steel prices reflects broader trends in construction material costs as tariffs begin to significantly impact domestic pricing. These tariffs have led to more favorable conditions for domestic steel producers, which have been able to raise prices accordingly.
• The softwood lumber price increase signals ongoing demand within the construction industry, particularly as residential and commercial projects continue to rise.
• Non-residential construction input costs are growing at a rapid pace, presenting challenges for construction companies, especially those relying heavily on steel and other metal products for large-scale projects.
• The overall optimism about profit margins, despite rising material costs, suggests that construction companies are planning for the long term, possibly anticipating that the rise in input prices will eventually stabilize.

As construction companies and industry stakeholders monitor price movements, the long-term effects of tariffs and inflation on project costs will be crucial in determining future profitability and market conditions.

Originally reported by Neil Gerrard in Construction Briefing.