May 25, 2004 (The Register-Guard - Knight Ridder/Tribune Business News via COMTEX) -- Why the spiralling price of construction materials?

Look to China.

China, home to 1.3 billion people and a developing economy, suddenly increased its scrap steel purchases on the world market last year. That pinched the supply for U.S. manufacturers who recycle scrap into new construction materials.

China is also a factor in rising oil prices. China's crude oil imports grew 36 percent in 2003.

China's building boom needs cement. It gobbled 40 percent of the world's supply last year.

"The Chinese are not only taking the cement, but they're taking the ships that are bulk carriers for all sorts of stuff," said Bill Conerly, a Lake Oswego economist and consul- tant.

But China is not to blame for the skyrocketing price of U.S. plywood panels and lumber. Economists credit three years of U.S. home construction for that. Wood products producers usually experience a down quarter that lets them catch up on orders, but that hasn't happened.

Will the high prices drop?

Rising interest rates worldwide might accomplish that for lumber.

Economists expect rising rates to cool off the U.S. home building market in coming months, increasing lumber supplies and easing prices, which are already beginning to drop. Steel and oil prices are expected to remain high for some time.

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