Oil prices down, why aren't shingles?

As for shingle prices, I was told one time that the asphalt used in shingles is actually a special blend and costs more to produce and is often in short supply so the price of crude does not play into the cost as much as we think it should. Supply and demand are probably the biggest factor in shingle prices. Where I am located, pricing has been dictated on what supplier can sell the cheapest. One lumber yard would sell shingles at cost with a house package of lumber, insulaton ect. and as a result forced other suppliers to match that price or come close. For years it was the old price increase notice of 8% and then the Mexican standoff for a few weeks until the "who blinks first" happens and pricing levels out. Suppliers recoup their costs by fuel surcharges, roof top charges per bundle and pricing accessories high.

MikeH- I've seen it as low as $25 / sheet around here. I think $35-40 might be typical. I was @ $60 a few years ago. Now my min. is $52 to stay "competitive".

3 things to consider: 1) Many contractors will charge for ghost sheets 2) Many will not bother with woodwork....some cheap metal patch (crossing of fingers will work too 3) Most are going out of business or don't DO callbacks

I can be a little flexible on my price as our truck is stocked when we leave the driveway. I'm not charging the customer (or doing it for free) some goofball $25/ hr. to get the stuff either.

OTOH, maintaining the truck and stocking it costs too, so I really can't drop below $52 unless it's a re-sheeter, and priced before the job starts.

I'd rather buy @ $ 9 sheet instead of $14, but I only get a bunc at a time and when I need it, is when I need it. Does not affect what I charge the customer as it Averages Out

Should have clarified what the deck replacement was for. Back in the 70's-80's and into the early 90's shakes were the go to roof in my area when they cost $80.00 bucks a square for materials. This left thousands of roofs needing replacement coming into the late 90's onward. Shakes are now $300.00 a square for materials so every roof required a full deck of OSB or plywood over the 1x4 spaced wood strapping in order to install asphalt shingles. The average house we did used around a hundred sheets. Deck replacement was one of the largest components of each job, so how you utilized your man power, material placement and handling and method of install played a big part in the profit margin on every job. The shingle install process remains verily static as far as time management but the shake removal and cleanup and re-decking was where you could maximize your profit if you were efficient.

Piecemeal repairs were always charged out at time plus materials plus overhead as per set clause in the contract. They weren't a money maker but you weren't losing either. I used to do the "old $50.00 bucks a sheet" routine until I actually did some time management analysis and found out it was about double that to come to break even point.

So.......100 sheets by a $10.00 spread was a thousand dollar profit before I hit the job site. Home Depot was my banker as I would always buy when they sent me out the one year or 18 month differed payment offer in the mail. They also provided the dry storage as I could buy and just sign out the lifts of material as I needed them. The shingle supplier would pick up the sheeting and roof top it at no charge with the shingle order.

I might have traded a few dollars back when I was wet behind the ears but I soon realized that setting your brand as far as performance in obtaining a contract price that was at the top end, if not the highest, and then maximizing efficiency was where you made your money. I've never priced shopped or quibbled prices with my shingle supplier and they have always treated me well. Service was the key ingredient in our relationship. They often bumped other deliveries in order to fit me in on short notice. I always laughed at the goons that bid a job cheap and then spend half a day grinding different suppliers to save a buck or two a square. A classic race to the bottom, flash in the pan business adventure.

By playing the price spread on the plywood and OSB I could make $10K or more a season without using any money out of my cash flow thanks to Home Depot.

seen-it-all Said: ...

OSB and plywood were another matter though. Ive seen both jump $6-10 dollars overnight ...

I know you say later in the post about buying quantity at low and selling high, and every little bit helps, but even at $10/sheet ($30/square) the way I price deck replacement it wouldn't matter.

With the disruption to production, total labor, disposal, material costs and general hassle, if $10/sheet makes a huge difference, then I'd say it's being priced too cheap to the customer. Generally speaking, that's exactly what I see all to often. I know around here $50/sheet seems "normal", and I can't even begin to comprehend replacing deck at $150/square. That is loosing money before it even starts, and that's if it's large sections. If you're piecemealing at that price, a person would be better off taking those jobs that don't require any deck repacement at a much discounted rate off their norm.... that's my $0.02 anyway. I look at at every aspect of the job from a profit per time invested perspective. If it slows you down, then jack up the price. Ain't any good reason to trade dollars unless it's a charity job.

Most who follow oil futures, and those manufacturers who depend on oil by-products, probably know that oil won't stay down very long. Putin won't allow it, his economy is losing billions on low oil prices. Expect somebody to drop bombs on somebody in the not too distant future.

When that happens, oils will be $175-200 in a few days.

My supplier has always been able to give me a heads up to any upcoming price changes and I was able to book materials out 3 months in advance by just providing him with the square amounts and colour.

OSB and plywood were another matter though. I've seen both jump $6-10 dollars overnight if a hurricane hit down in the states. I would quote a job and tell the customer that the price was based on the day of quote price for sheeting and they had the option of paying in advance to hold that price or pay based on price at delivery to job. Everyone always paid in advance instead of gambling on 3 months down the road. I would always purchase plywood in quantity when the price was low ( six to eight lifts ) and was always able to sell at a profit. Every little bit helps the bottom line.

Lefty, the only quibble I've ever had with the pricing was the volatile market conditions we had in (2008?), when my distributor wasn't given the pricing on shingles until received at the dock. As the situation deteriorated, I had to work very hard to stay ahead of the pricing curve.

To walk my customer through our roof process and pricing, and to then look them in the eye and say that pricing could change before our schedule would permit us to do the work . . . well, it was unsettling to say the least. I've never sold that narrative before, and found it to be very uncomfortable, however truthful it was. The distributor was very good about working with me on holding the pricing on scheduled work.

My grandfather and father (and I, for that matter) had worked for years in a very stable pricing environment. We got spoiled.

I've become somewhat desensitized to today's pricing. As you say, every one of us is in the same boat. Price for profit and let the rest take care of itself.

Does not make much difference what the price is. We all pay basically the same. If the shingle price goes up, so do mine.

Old School has got it right on the refining process impacting the supply of asphalt used in shingles . . . and roads . . . and other numerous applications which have been developed using the dregs of the refining process. Now on top of that, we need to consider that there are other countries increasing demand for these dregs (Brazil, India and China come to mind) who, as their standard of living rises, also demand paved roads and more durable roofing products . . . Then ad the cost of transportation, which at $4/gal diesel is not cheap. I don't for see any kind of a significant drop in shingle prices in my lifetime, but my wife informs me that occasionally I'm wrong . . .

The long and short of this is a dramatic drop in supply coupled with alot of pressure on the demand side. Basic economics . . .

Oh, and as it turns out, crude from the fracking process does not yield useable asphalt for our industry.

Shingles are made from asphalt, and asphalt is a byproduct of the refining process. It used to be way back when that they would have about 5 % left over and it was "good" asphalt. Now they have installed stuff at the end of the line to take out more of the good stuff so there is less asphalt and of a lesser quality for the shingle companies and the asphalt pavers to use. THEREFORE it costs more, not less.

Not that is the line that the shingle companies use. whether you believe that or not is up to you. There are also fewer and fewer companies making shingles as a lot of the regional manufacturers have went by the wayside. the bigger ones have combined too, so we are getting to the point where there will be 3 shingle companies and three window companies and three banks and three insurance com.... Hey, is that really happening?

Personally I think they are all scrambling. Distributors have all bought high so if the shingles are made cheaper there will be hell to pay. How are they going to move all the high priced shingles. Lower prices mean less profit. 20% of $40.00 per square is less than 20% of $80.00 per square. You think it would be a good thing.

There's always some lag time. We'll see when the season opens up. The shingles your suppliers have bought for the coming year were prolly produced when gas was still more expensvie than it is now.

I, for one, am surprised shocked and a little pissed.

My vendors don't have anything to say on the subject, but they act like the feel my pain :unsure: :unsure: