Steel prices have risen sharply, with more increases likely if an announced 25% tariff on steel and aluminum imports goes into effect on March 12. Steel supplier ClarkDietrich notified customers on February 12 that it “will implement a price increase of a minimum of 10% on all steel products nationally effective March 3…Please be aware that with the recent announcement of the reinstatement of Steel Tariffs under Section 232, additional increases are likely forthcoming.

“The power industry has already been experiencing a shortage of transformers, for which demand is expected to jump even more in the coming years,” the Wall Street Journal reported online on Thursday. “Suppliers have been reluctant to invest large sums of capital to expand production capacity because such investments have long break-even timelines, according to a report from Wood Mackenzie….Only about 20% of transformer demand can be met by the domestic supply chain, according to Wood Mackenzie, which also estimated that transformer prices have already risen 70% to 100% since January 2020 because of inflation for raw materials such as electrical steel and copper. Steel is also an essential component of transformers, and notably, Cleveland-Cliffs is the only domestic producer of grain-oriented electrical steel for them. Assuming that Trump moves ahead with 25% tariffs on Canada and Mexico, and imposes tariffs on copper as well, Wood Mackenzie estimates that transformer prices could increase by an additional 8% to 9%.”

Housing starts (units) in January declined 9.8% from December and 0.7% year-over-year (y/y) at a seasonally adjusted annual rate, the Census Bureau reported on Wednesday. Single-family starts fell 8.4% for the month and 1.8% y/y. Multifamily (five or more units) starts skidded 11% for the month but rose 2.3% y/y. Residential permits inched up 0.1% in January but declined 1.7% y/y. Single-family permits were unchanged for the month but declined 3.4% y/y. Multifamily permits fell 1.4% in January but edged up 0.2% y/y. Multifamily units under construction declined for the 16th month in a row, by 2.1%, and 22% y/y.

Georgia “is now one of the fastest-growing markets in the U.S. for data centers,” ConstructConnect reported on Monday. “In 2024, Atlanta was the top city in the U.S. for new facilities. As of mid-2024, data center construction had increased 76% in the Atlanta market compared to the same time in 2023. The state has nearly 160 major [data centers] and is now gearing up for 11 more additions.”

Well this data is bad!! I knew about the transformer shortage but the price is up 100% in 5 years thanks to copper and steel add on top of that USA only has 20% capacity. Nothing stops a large construction project in its tracks then a back order of transformers. Pain is coming people.