The Latest Aggregates Producer Price Index.
By Denys Vasylenko
This is the fourth in a series of articles on pricing. -Ed.
In the February edition of Rock Products, the Aggregates Producer Price Index (APPI) was introduced. This index tracks the current pricing of various aggregate categories in the United States and is updated quarterly. The first edition of the index and a quarter of price movements (December 2022-February 2023) are now available and will soon be uploaded to the Mineralocity Aggregates platform, https://mineralocity.com.
Comprising more than 240,000 data points, the APPI provides a lens to view a geographical area, single out a geology type or category of products, or combine any of the variables. The APPI has two basic metrics: the first, a ranking of A-E, shows where a product category sits in relation to that category nationally, while the second represents the degree of price movement experienced by that product category in the financial quarter being measured.
The data reveals a significant national price increase in aggregates by 4.75% in the first quarter of 2023, starting from a baseline established in December 2022. This increase may reflect the smaller companies’ annual price increases on Jan. 1, and larger companies continuing to move prices aggressively.
However, price increases are not across the board, with some products already seeing price erosion in some states. The graphic below shows the tabular form of each state APPI as of February 2023, where a further data point on the right indicates a more attractive sales price of aggregates FOB in that state. As with most quadrant graphs, a data point trending toward the top right is an ideal position, while the least desirable position is in the lower left.
If a state has all the geologies and product categories represented, the APPI will be available for each combination of these variables. This in-depth look into product categories and geologies tells us the profile of aggregates, and how suppliers are reacting to the changing market conditions.
Again, this data will be updated quarterly. At this point in time, there is a lot of volatility in pricing, as we see an abrupt drop off in residential construction, but strong infrastructure spend for a five-year period.
A deeper look at the data reveals the resulting change in pricing. Products that have experienced change and which of these more than others added to this change. We observe that coarse materials lowered the change of overall index for Florida while sand prices increased for Florida.
On the contrast, Ohio had positive price change in sand and medium in base materials, but lowered the price of coarse asphalt aggregates
Looking at the breakdown of the price change by several aggregate types allows you to see what change triggered each product for a total change in price and to more deeply estimate your capabilities in the market.
The “State APPI” is a consolidation of all product categories and all geologies. The “State APPI” can be broken out into its individual components (Concrete Sand, Base, Coarse, Asphalt Coarse), which can make for interesting reading.
Data collected for the APPI comes from various sources, including published list prices, publicly declared tenders and submitted quotes, and is normalized to remove fluctuations due to volume, delivery rates, contract supply, and other factors.
Although the latest quarter of the APPI consists of more than 240,000 data points, more data is always welcome. To encourage participation in the APPI, Chris Summers of Burgex Inc., the creators of Mineralocity Aggregates (the platform that exclusively hosts the APPI), is offering a free “State APPI” to any company that agrees to supply quarterly updates.
But remember, you have to be cautious when dealing with pricing information, so any data requests will follow a strict format. No pricing data submitted to the APPI will be made public, and all pricing reported will follow the two-letter format detailed above.
In conclusion, the introduction of the Aggregates Producer Price Index (APPI) is a significant milestone in the construction materials industry. The APPI provides an invaluable tool for producers, suppliers, and industry analysts to track and analyze price movements of various aggregates across different geographical areas.
With more than 240,000 data points, the APPI enables users to identify trends and make informed decisions regarding their business strategies. The APPI is updated quarterly, providing the latest insights into pricing and industry trends. It is a game-changer for the industry and will continue to provide invaluable insights into the aggregates market for years to come.
Denys Vasylenko is the product manager for Market Bee. Please send an email to [email protected] to take advantage of the offer of your state pricing profile.