April constructsteel newsletter

Construction market trends

United States

X Values ABI (LHS) Output (RHS, %, y-o-y)
Jan-19 55.3 -1.54
Feb-19 50.3 -2.64
Mar-19 47.8 1.08
Apr-19 50.5 1.93
May-19 50.2 3.56
Jun-19 49.1 8.14
Jul-19 50.1 10.15
Aug-19 47.2 11.25
Sep-19 49.7 11.98
Oct-19 52 13.42
Nov-19 51.9 17.45
Dec-19 52.1 13.61
Jan-20 52.2 14.07
Feb-20 53.4 11.99
Mar-20 33.3 8.27
Apr-20 29.5 3.30
May-20 32 0.45
Jun-20 40 -0.66
Jul-20 40 -2.89
Aug-20 40 -6.80
Sep-20 47 -7.20
Oct-20 47.5 -7.37
Nov-20 46.3 -9.66
Dec-20 42.3 -8.71
Jan-21 44.9 -6.91
Feb-21 53.3 -7.50
Mar-21 55.6 -3.85
Apr-21 57.9 -1.17
May-21 58.5 -0.88
Jun-21 57.1 -0.57
Jul-21 54.6 0.67
Aug-21 55.6 2.24
Sep-21 56.6 2.81
Oct-21 54.3 3.34
Nov-21 51 7.40
Dec-21 52 7.47
Jan-22 51 7.16
Feb-22 51.3 9.06
Mar-22 58 7.51
Apr-22 56.5 11.1
May-22 53.5 11.5
Jun-22 53.2 10.7
Jul-22 51 12.6
Aug-22 53.3 13.4
Sep-22 51.7 13.5
Oct-22 47.7 12.9
Nov-22 46.6 13.6
Dec-22 48.4 15.5
Jan-23 49.3 20.2
Feb-23 48 20.9
Mar-23 50.4 21.3
Apr-23 48.5 22.2
May-23 51 23.2
Jun-23 50.1 21.8
Jul-23 50 21.4
Aug-23 48.1 23.4
Sep-23 44.8 23.4
Oct-23 44.3 23.5
Nov-23 45.3 23.4
Dec-23 45.4 21.8
Jan-24 46.2 15.2
Feb-24 49.5 12.6

Construction spending unexpectedly declined in February, with strength in single-family output more than offset by weakness in private non-residential and public outlays.

Private residential output up 0.7% m-o-m (6.3% y-o-y) in February; Building permits up 2.4% m-o-m (2.8% y-o-y).

Private non-residential output down -0.9% m-o-m (12.6% y-o-y) in February; Architecture Billings Index (ABI) up to 49.5 in February from 46.2 in January (< 50, contraction).

China

X Values Floor space started
Jan-19 17.91
Feb-19 13.08
Mar-19 10.69
Apr-19 13.08
May-19 11.15
Jun-19 9.12
Jul-19 6.61
Aug-19 6.95
Sep-19 6.05
Oct-19 11.01
Nov-19 8.02
Dec-19 8.26
Jan-20 -6.58
Feb-20 -17.65
Mar-20 -30.64
Apr-20 -18.42
May-20 -8.57
Jun-20 3.82
Jul-20 7.59
Aug-20 7.7
Sep-20 3.91
Oct-20 1.28
Nov-20 1.84
Dec-20 4.71
Jan-21 11.8
Feb-21 24.9
Mar-21 8.3
Apr-21 -5
May-21 -10.9
Jun-21 -6.1
Jul-21 -10
Aug-21 -13.1
Sep-21 -17.4
Oct-21 -21.2
Nov-21 -22.6
Dec-21 -28.6
Jan-22 -24.1
Feb-22 -23.1
Mar-22 -17.5
Apr-22 -28.9
May-22 -36
Jun-22 -43.8
Jul-22 -44.1
Aug-22 -45.3
Sep-22 -45.1
Oct-22 -42.1
Nov-22 -43.9
Dec-22 -43.8
Jan-23 -40.4
Feb-23 -27.45
Mar-23 -19.16
Apr-23 -24.24
May-23 -28.65
Jun-23 -29.59
Jul-23 -29.12
Aug-23 -27.70
Sep-23 -21.50
Oct-23 -19.70
Nov-23 -11.30
Dec-23 -9.90
Jan-24 -11.6
Feb-24 -23

Data released for January & February indicates that the sector is struggling to stabilise despite measures being ramped up to support the housing market.

The 3 month moving average y-o-y decline in floor space reached -23% in February; floor space sold was down -24% y-o-y.

Europe

X Values PMI (LHS) Output (RHS, %, y-o-y)
Jan-19 50.6 5.63
Feb-19 52.6 5.64
Mar-19 52.2 5.65
Apr-19 52.1 2.72
May-19 50.6 1.96
Jun-19 50.8 1.86
Jul-19 50.6 1.77
Aug-19 49.1 1.86
Sep-19 50.5 0.73
Oct-19 50.7 0.93
Nov-19 50.6 1.48
Dec-19 51.3 -1.53
Jan-20 51.9 5.04
Feb-20 52.5 0
Mar-20 33.5 -15.61
Apr-20 15.1 -29.52
May-20 39.5 -10.24
Jun-20 48.3 -4.56
Jul-20 48.9 -2.66
Aug-20 47.8 0
Sep-20 47.5 -2.28
Oct-20 44.9 -1.47
Nov-20 45.6 -0.10
Dec-20 45.5 -1.1
Jan-21 44.1 -3.2
Feb-21 45 -3.89
Mar-21 50.1 19.03
Apr-21 50.1 42.93
May-21 50.3 12.74
Jun-21 50.3 5.45
Jul-21 49.8 3.67
Aug-21 49.5 -1.00
Sep-21 50 3.35
Oct-21 51.2 3.82
Nov-21 53.3 2.85
Dec-21 52.9 -0.18
Jan-22 56.6 3.95
Feb-22 56.3 7.55
Mar-22 52.8 3.70
Apr-22 50.4 2.63
May-22 49.2 2.35
Jun-22 47 2.08
Jul-22 47 1.45
Aug-22 45.7 2.03
Sep-22 44.2 0.54
Oct-22 45.3 0.72
Nov-22 43.6 1.16
Dec-22 42.6 -0.09
Jan-23 46.1 0.44
Feb-23 47.6 1.67
Mar-23 45 -0.90
Apr-23 45.2 0.26
May-23 44.6 0.53
Jun-23 44.2 -0.00
Jul-23 43.5 1.52
Aug-23 43.4 0.72
Sep-23 43.6 0.98
Oct-23 42.7 -0.50
Nov-23 43.4 -2.10
Dec-23 43.6 3.2
Jan-23 41.3 0.3
Feb-24 42.9
Mar-24 42.4

Construction activity remains lacklustre, with notable declines in the housing sector.

Eurozone construction up 0.5% m-o-m (0.3% y-o-y) in January; Buildings down -2.1% m-o-m (-3.1% y-o-y); Civil engineering up 1.0% m-o-m (2.8% y-o-y)
The IHS Markit Eurozone Construction PMI fell to 42.4 in March from 42.9 in February (< 50, contraction).

India

X Values Avg industrial production (y-o-y)
Jan-19 1.4
Feb-19 1.8
Mar-19 5.0
Apr-19 4.3
May-19 2.9
Jun-19 0.2
Jul-19 2.0
Aug-19 -0.7
Sep-19 -5.7
Oct-19 -5.4
Nov-19 0.3
Dec-19 0.9
Jan-20 1.4
Feb-20 5.1
Mar-20 -9.0
Apr-20 -44.4
May-20 -21.1
Jun-20 -12.1
Jul-20 -8.0
Aug-20 -7.5
Sep-20 -0.3
Oct-20 -1.8
Nov-20 -1.7
Dec-20 -0.3
Jan-21 0.7
Feb-21 -3.7
Mar-21 12.6
Apr-21 62.6
May-21 16.4
Jun-21 9.4
Jul-21 10.0
Aug-21 12.2
Sep-21 5.4
Oct-21 8.7
Nov-21 3.2
Dec-21 4.1
Jan-22 4.0
Feb-22 5.9
Mar-22 4.8
Apr-22 9.5
May-22 19.3
Jun-22 13.1
Jul-22 4.8
Aug-22 4.2
Sep-22 8.3
Oct-22 0.7
Nov-22 5.7
Dec-22 8.3
Jan-23 9.7
Feb-23 7.4
Mar-23 4.2
Apr-23 4.6
May-23 5.2
Jun-23 8.4
Jul-23 8.5
Aug-23 13.4
Sep-23 9.4
Oct-23 12.0
Nov-23 7.9
Dec-23 4.9
Jan-24 4.1
Feb-24 6.7

India’s core sector growth improved to a three-month high led by steel, electricity, and coal sectors.

Weighted average of eight core industries output rose by 6.7% y-o-y in February; production of steel up 8.4%, cement up 10.2% y-o-y.

 

Special topic

Steel: A necessity for growing requirements of sustainable infrastructure

Ashish Anupam, constructsteel’s Vice-Chair, underscores steel’s vital role in sustainable infrastructure growth, crucial for durable buildings and transport networks worldwide. Innovating production methods is key for sustainability, particularly in fast-developing nations like India, ensuring a reliable steel supply for future projects and fostering safer, smarter cities.

Full article

Technical trends

Reimagining engineering to deliver more projects, more efficiently.

In the face of pressing infrastructure needs for climate commitments, the engineering sector requires a tech-enabled operating model. With trillions of dollars needed for the energy transition, conventional approaches are falling short. Engineering talent shortages exacerbate delivery challenges, risking time, cost, and emissions targets. However, disruptive features driven by software engineering advancements are emerging. These include redefining the engineering “product” and embracing AI-enabled design automation. Transforming the traditional business model towards output-based compensation is crucial for sustainable competitive edge.

Full article

Construction news headlines

construction market and regulations

North America:

The US Department of Energy (DOE) announced it is investing up to
USD6 Bn in green construction materials, for 33 projects across more than 20 states. The investment is to decarbonise energy-intensive industries, reduce industrial greenhouse gas emissions, support good-paying union jobs, revitalise industrial communities, and strengthen the nation’s manufacturing competitiveness. The 33 projects will be funded by the President’s Bipartisan Infrastructure Law and Inflation Reduction Act.

Link

North America:

Total construction starts, in the US, fell 8% in February to a seasonally adjusted annual rate of USD1.07 Tn, as per the data collected by Dodge Construction Network. It was the biggest monthly starts drop since November, when starts cratered 15%. Yet on a year-over-year basis, project kickoffs stayed in the black. For the 12 months ending February 2024, total construction starts were up 2% from the same time period ending February 2023.

Link

Europe:

Britain’s latest estimates from the Office for National Statistics (ONS) show that the value of new construction work in the three months to January 2024 fell by 4.5%. Repair & maintenance, on the other hand, increased by 4.0%. Overall, therefore, the ONS estimates that construction output decreased by 0.9% in the three-month period. New infrastructure work was the most significant faller, down 9.3%. However, after three consecutive monthly falls, monthly construction output is estimated to have increased 1.1% in volume terms in January 2024, to reach a value of GBP15,422 Mn (USD19,522 Mn).

Link

Europe:

In February, Polish construction output fell by 4.9% year-on-year, following a 6.1% decline in January. This result was worse than the consensus of -2.0%. In YoY terms, all categories reported by the CSO declined. Overall, building construction deteriorated the least (-0.3% YoY), most likely influenced by favourable weather conditions and high temperatures in February. The weakest area of activity was civil engineering construction related to infrastructure projects (down 7.8% YoY).

Link

Asia:

Vietnam’s National Assembly approved a resolution to allocate VND147 Tn (USD6.5 Bn) for the construction of 729 kilometres of the Eastern North-South expressway during the 2021-2025 period. Under the resolution, the Eastern North-South expressway would include sections from Bai Vot (Ha Tinh Province) to Cam Lo (Quang Tri Province), from Quang Ngai Province to Nha Trang (Khanh Hoa Province), and from Can Tho City to Ca Mau Province. Under the Government’s calculation, toll collection on the entire 12 sub-projects would help raise VND18.3 Tn (USD804.5 Mn) in five years and around VND38 Tn (USD1.67 Bn) in the 10-year period.

Link

Middle East:

Bahrain reported a total of USD2.4 Bn in investment stemming from 9 major projects, which are set to generate 3,000 employment opportunities following the introduction of its Golden License in April 2023. The initiative, which offers premium benefits and first-priority allocation on key project milestones such as land allocation, aims to maintain Bahrain’s demonstrated ability to attract impactful businesses across industries to contribute to its positive trajectory of sustained economic growth.

Link:

Middle East:

During the first meeting of The Executive Council of Dubai, Crown Prince of Dubai and Chairman of Dubai Executive Council approved a portfolio of public-private partnership (PPP) projects of the Dubai Government valued at AED40 Bn (USD10.9 Bn). The Department of Finance of the Government of Dubai announced the portfolio as part of its PPP strategy. Featuring a wide variety of projects, the new portfolio aims to further enrich cooperation and inspire new collaborations between the public and private sectors in the emirate.

Link:

Building materials and construction technologies

North America:

Construction input prices increased 1.4% in February predominantly due to lingering inflation. The bad news is twofold for contractors. First, higher input prices generally lead to lower demand for construction services. When combined with already pricey project financing costs, project owners are less likely to proceed with construction work due to the high and increasing input costs. Second, recent inflation data suggest a higher probability of prolonged elevated interest rates. Heightened borrowing costs would slow construction activity, particularly for privately led projects.

Link

Europe:

Italian cement output expanded 8% YoY in December 2023. This was largely driven by robust demand from local public sector works, which totalled EUR18 Bn in the year to December. However, cement output contracted 2% for 2023 as a whole, weighed down by sluggish activity in the construction sector. Data from the national statistics provider, ISTAT, shows construction output contracted 0.1% for the year.
Grey cement imports increased by 52% to 188,088t in November 2023, with a total CIF value of EUR16 Mn or EUR87/t as values per tonne held steady. For the first 11 months of the year, import volumes were up 52%.

Link

Europe:

UK Sales volumes of materials through British builders’ merchants were down by 13.7% in 2023 compared to 2022. The latest BMF Builders Merchants Building Index (BMBI) report confirms the extent of the slowdown throughout the whole of 2023. In the fourth quarter of the year, daily sales volumes were down 10.1% on the previous quarter and by 12% compared to Q4 2022. Total takings were down by 15.7% for British builders’ merchants in the fourth quarter compared to the third quarter of 2023, but with four fewer trading days in Q4, daily takings were 10.1% down. Prices were up by 5.1%, quarter on quarter. Comparing Q4 2023 with Q4 2022, takings were down 7.3% on a like-for-like basis. Prices were up 7.1% year-on-year.

Link

Africa:

The Zimbabwean government has ended the issuance of cement imports. The licenses were first introduced in October 2023 to help curb the artificial shortage of cement as prices spiralled out of control. With the price of a 50kg bag of cement jumping from USD9 to USD20, the country’s largest infrastructure projects were in danger of significant delays. To address the issue, the government allowed companies and individuals to import up to 5t of cement without the need for an import license. Quantities above 5t required an import license from the Ministry of Industry and Commerce. However, the licenses did not apply to commercial imports.

Link

Asia:

Siam Cement Group (SCG) has introduced a new low-carbon cement, contributing to Thailand’s net-zero ambitions. The new cement reportedly matches or is stronger than traditional Portland cement. SCG achieved this by improving its manufacturing processes, using clean energy sources and waste heat utilisation, leading to a 38% decrease in energy consumption. The company also modified raw material ratios in order to further reduce emissions.

Link

Construction sector players

North America:

Holcim acquired two ready-mix concrete plants of COMOSA in Querétaro, central Mexico. The acquisition is expected to strengthen Holcim’s presence in the local market, which has 70 ready-mix plants. With a total capacity of 120m3/h, Holcim will double its current capacity to 36,000m3 of concrete per month. The expansion strengthens Holcim’s production network, and also underscores its continued commitment to sustainable construction and innovation.

Link

Europe:

Balfour Beatty reported a dip in pre-tax profit to GBP244 Mn (USD312 million) for the full year of 2023, down from GBP287 Mn (USD363 Mn) the year prior, a nearly 15% decrease. Despite the drop, revenue grew to GBP9.6 Bn (USD12 Bn) in 2023.
Backlog, on the other hand, dipped slightly to GBP16.5 Bn (USD21 Bn), less than the GBP17.4 Bn (USD22 Bn) the prior year. Even as profits dipped on the investment portfolio’s struggles, Balfour Beatty’s construction division had a solid year. The segment reported revenue of GBP8.1 Bn (USD10.26 Bn) in 2023, up from GBP7.5 Bn (USD9.5 Bn) pounds in 2022.

Link

Europe:

Overall, Skanska’s total revenue for 2023 was USD15.2 Bn compared with USD15.6 Bn in 2022. In its construction operations, the company reported an operating margin of 3.5% on an operating incoming of SEK5.6 Bn (USD543 Mn) with 2023 revenue at USD15.6 Bn. The backlog remains historically high at USD22.2 Bn. The segment’s operating income between 2022 and 2023 was down -2.4%.

Link

Europe:

Ferrovial bought a 24% stake in Indian road builder IRB Infrastructure Trust for EUR740 Mn (USD803 Mn). IRB owns 12 toll road concessions in India, covering an estimated 2,000km, with plans to acquire a further three. The EUR740 Mn (USD803 Mn) includes EUR97 Mn (USD105 Mn) earmarked for the outstanding projects.
Cintra, the toll road subsidiary of Ferrovial, purchased the shares from Singaporean state-owned wealth fund GIC, which will retain a 25% stake. A 51% stake in the company will be retained by IRB Infrastructure Developers. Ferrovial said the acquisition would mark the close of its expansion in India.

Link

Middle East:

Al Jouf Cement reported revenue of SAR301 Mn (USD80 Mn) in 2023, up 19.7% on the previous year. The increase can be attributed to improved sales volumes and average selling prices. Operating income in 2023 came in at SAR116 Mn (USD31 Mn), marking a YoY advance of 59.1%. In the fourth quarter of 2023, revenue stood at SAR84 Mn (USD22 Mn), up 5.4% on the same period a year earlier. Net income also contracted YoY, falling from SAR23 Mn (USD6 Mn) in the 4Q22 to SAR12 Mn (USD3 Mn) in the 4Q23.

Link

Asia:

West China Cement Ltd has reported a 65.3% decrease in its net income from CNY1214.8 Mn (USD168.7 Mn) in 2022 to CNY421.3 Mn (USD58.2 Mn) in 2023. This came as sales revenue rose slightly by 6.3% rise in sales revenue, from CNY8489 Mn (USD1173 Mn) to CNY9,021 Mn (USD1246 Mn), over the period. Following West China Cement’s poor financial performance, the company has vowed to implement cost control measures to reduce the company’s cost of sales.

Link

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