Rising prices for asphalt shingles: slow but sure...
The National Roofing Contractors Association (NRCA) issued recently a special report that describes asphalt roofing industry in 2005.
The report mentioned Oil prices are at record levels, and many construction materials-and virtually all roofing materials-are made from derivatives of crude oil. Venezuela and Nigeria are blamed for having instability in oil and asphalt supply causing troubles to American asphalt roofing industry.
While the U.S. has been placed on high alert for a terrorist attack, the roofing industry has been placed on alert for a coming asphalt crisis.
U.S. roofing suppliers on the East Coast rely heavily on Venezuela for about 90% of roofing asphalt. However, the problem is expected to expand throughout the country.
Harold R. Beattie Jr., sr. vice president, CFO and treasurer of ElkCorp, Dallas, said, “There’s two reasons that Venezuela is important. It exports oil to the U.S., which has been refined, and as part of the refining process asphalt is created. It also exports asphalt to the U.S.
Venezuelan asphalt is a high sulfur blend that is generally a good mix for shingles. A refinery producing a light crude produces less asphalt than a heavy crude oil. Venezuela refineries produce heavy crude.
Shingle prices needed to go up because asphalt costs are very high. The industry needs to recover those prices.”
Asphalt prices at the end of year were around $200 per ton for roofing grade, delivered. Cost varies on the distance the asphalt is shipped to the plant. Delivery is a significant part of cost. Asphalt costs were as high as $240 to $250 per ton in February.
There is another, related concern. Different asphalts have different properties, and it will be increasingly important for you to work closely with your most trusted suppliers to be sure they are taking these changes into account. It is fair to ask roofing material manufacturers what changes, if any, you might expect in the materials you will be buying and what testing has been done to ensure the long-term performance of new and different asphalts and asphalt blends.
NRCA also provided some recommendations:
1. Work closely with suppliers to get the best information about pricing and availability. Delivery times for many products now exceed one month.
2. Whenever possible, place your orders early. Planning is crucial-especially on large, fixed-price contracts.
3. Keep your customers well-informed of the situation. It may make sense to take delivery earlier than usual to ensure material availability and obtain firm pricing. Include a contract provision that reflects how you have agreed to handle the problem.
4. Consider including contract provisions intended to reflect market conditions. That way, you will not be caught in a situation where you cannot perform the contract when required by the general contractor or owner because either the necessary materials are not available or if a job has been delayed.
The report mentioned Oil prices are at record levels, and many construction materials-and virtually all roofing materials-are made from derivatives of crude oil. Venezuela and Nigeria are blamed for having instability in oil and asphalt supply causing troubles to American asphalt roofing industry.
While the U.S. has been placed on high alert for a terrorist attack, the roofing industry has been placed on alert for a coming asphalt crisis.
U.S. roofing suppliers on the East Coast rely heavily on Venezuela for about 90% of roofing asphalt. However, the problem is expected to expand throughout the country.
Harold R. Beattie Jr., sr. vice president, CFO and treasurer of ElkCorp, Dallas, said, “There’s two reasons that Venezuela is important. It exports oil to the U.S., which has been refined, and as part of the refining process asphalt is created. It also exports asphalt to the U.S.
Venezuelan asphalt is a high sulfur blend that is generally a good mix for shingles. A refinery producing a light crude produces less asphalt than a heavy crude oil. Venezuela refineries produce heavy crude.
Shingle prices needed to go up because asphalt costs are very high. The industry needs to recover those prices.”
Asphalt prices at the end of year were around $200 per ton for roofing grade, delivered. Cost varies on the distance the asphalt is shipped to the plant. Delivery is a significant part of cost. Asphalt costs were as high as $240 to $250 per ton in February.
There is another, related concern. Different asphalts have different properties, and it will be increasingly important for you to work closely with your most trusted suppliers to be sure they are taking these changes into account. It is fair to ask roofing material manufacturers what changes, if any, you might expect in the materials you will be buying and what testing has been done to ensure the long-term performance of new and different asphalts and asphalt blends.
NRCA also provided some recommendations:
1. Work closely with suppliers to get the best information about pricing and availability. Delivery times for many products now exceed one month.
2. Whenever possible, place your orders early. Planning is crucial-especially on large, fixed-price contracts.
3. Keep your customers well-informed of the situation. It may make sense to take delivery earlier than usual to ensure material availability and obtain firm pricing. Include a contract provision that reflects how you have agreed to handle the problem.
4. Consider including contract provisions intended to reflect market conditions. That way, you will not be caught in a situation where you cannot perform the contract when required by the general contractor or owner because either the necessary materials are not available or if a job has been delayed.
