December 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 23.1
Oct-23 44.3 22.4

New construction supported by shortage of houses despite higher mortgage rates; commercial real estate suffers from high interest rates and slow return to the office.

Private residential output up 1.2% m-o-m (0.7% y-o-y) in October; Single family building permits reached 969,000 units and the highest since May 2022.

Private non-residential output up 0.1% m-o-m (22.4% y-o-y) in October. Architecture Billings Index (ABI) continued its contraction and to 44.3 in October from 44.8 in September (< 50, contraction).

China

X Values Series1
Jan-19 -1.90
Feb-19 -0.86
Mar-19 -1.40
Apr-19 -0.25
May-19 -1.27
Jun-19 -2.33
Jul-19 -2.30
Aug-19 0.58
Sep-19 2.90
Oct-19 3.11
Nov-19 2.01
Dec-19 0.07
Jan-20 -6.38
Feb-20 -15.49
Mar-20 -28.55
Apr-20 -19.28
May-20 -8.53
Jun-20 3.19
Jul-20 6.34
Aug-20 7.45
Sep-20 9.85
Oct-20 11.68
Nov-20 11.25
Dec-20 12.67
Jan-21 20.60
Feb-21 35.73
Mar-21 36.64
Apr-21 22.52
May-21 10.58
Jun-21 10.97
Jul-21 3.39
Aug-21 -3.96
Sep-21 -12.52
Oct-21 -16.65
Nov-21 -16.07
Dec-21 -16.80
Jan-22 -14.05
Feb-22 -13.16
Mar-22 -13.78
Apr-22 -23.32
May-22 -28.53
Jun-22 -28.03
Jul-22 -25.19
Aug-22 -22.29
Sep-22 -22.06
Oct-22 -20.27
Nov-22 -24.07
Dec-22 -29.91
Jan-23 -27.17
Feb-23 -19.69
Mar-23 -03.54
Apr-23 -05.79
May-23 -10.64
Jun-23 -21.93
Jul-23 -24.69
Aug-23 -25.96
Sep-23 -22.18
Oct-23 -21.17

China: Decline in residential property sector is easing but more government support may be needed. Infrastructure and particularly railway continues to support the overall sector.

The 3 month moving average y-o-y decline in floor space reached -20% in October; floor space sold was down -21% y-o-y. Railway investment up 25% year to date, 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
Nov-23 43.4

The European Central Bank’s aggressive tightening policy continues to dampen demand conditions.

Eurozone construction up 0.4% m-o-m (1% y-o-y) in September; Buildings up 0.3% m-o-m (0.3% y-o-y); Civil works up 1.6% m-o-m (4.2% y-o-y).

The IHS Markit Eurozone Construction PMI increased to 43.4 in November from 42.7 in October (< 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 8.3
Jul-23 8.4
Aug-23 12.5
Sep-23 9.2
Oct-23 12.1

Core sector growth rebounds to double digits in October, helped by a weaker base of comparison; underlying trend in activity supportive.

Weighted average of eight core industries output rose by 12.1% y-o-y in October; production of steel up 11%, cement up 17.1% y-o-y.

 

Technical trends

Generative AI can change real estate, but the industry must change to reap the benefits

Generative Artificial Intelligence (gen AI) is reshaping real estate by leveraging data for tasks like rapid investment opportunity identification, innovative design, and personalised customer experiences. While the industry has been slow to adopt technology, gen AI offers a chance to leapfrog into the cutting edge. McKinsey Global Institute estimates gen AI could generate $110-180 billion in real estate value. However, despite the hype, many struggle to implement and scale gen AI effectively. This article outlines seven key actions for real estate companies to unlock gen AI’s full potential, emphasising the need for C-suite alignment, a focus on proprietary data, effective prompt engineering, and modern technology stacks. The industry, facing challenges, is urged to seize the moment and embrace gen AI for a digitally powered future.

Full article

Construction news headlines

construction market and regulations

North America:

Total construction starts in the US tumbled another 7% in October to a seasonally adjusted annual rate of USD1.1 Tn, due to a widespread slowdown in gas and utility projects. The drop pushes overall year-to-date construction starts through October to trail last year’s pace by 4%. The decline also follows September’s 6% contraction, marking two consecutive months of losses.

Link

Europe:

Production in the EU construction sector will decrease by 1.7% YoY in 2023, as compared to 0.5% in the previous forecast.
During the second quarter of 2023, the activity of the construction sector of the European Union decreased by 2.5% YoY. This trend continues from the fourth quarter of 2022, when the indicator fell by 0.2%, and in the first quarter of 2023, by 0.5%.

Stagnation of the industry is associated with the rise in prices for construction materials in combination with labor shortages in some EU countries. In addition, the indicators are affected by growing economic uncertainty and expectations of interest rate hikes in the context of rising inflation.

Link

Africa:

Sub-Saharan African nations, including Kenya, are increasingly considering Floating Photovoltaic (FPV) solar power to offset lower hydropower production. With potential land savings and enhanced solar panel performance, countries like Ghana, Mauritius, Seychelles, Mozambique, Zimbabwe, South Africa, and Uganda are also exploring FPV projects to address energy needs and land use concerns.

Link

Middle East:

Dubai plans to build a new metro line at a total cost of UAE18 bn Dirhams (USD4.9 bn) Dubai Metro’s Blue Line route will extend for 30-kilometres with half of the line running underground and reaching up to 70 metres in depth. The total length of Dubai Metro network after the opening of the Blue Line will touch 131km with 78 stations and 168 trains.

Link

Asia:

The Ministry of Construction in Vietnam supports the high-speed railway investment on the North-South axis, which involves building a new double-track railway with a gauge of 1.435mm, load capacity of 22.5 tons/axle, and a design speed of 350km/h. The project, costing almost 69 bn USD, aims to enhance transportation with 60% of the renewed line consisting of bridges, 10% tunnels, and 30% ground tracks, spanning 1,545km through 20 provinces and cities.

Link

Building materials and construction technologies

Global:

The construction technology sector surpassed USD30 Bn in cumulative venture funding since 2014, continuing its streak of major growth the numbers exclude funding for failed modular builder Katerra, which had a meteoric rise followed by its sudden fall in 2021. In addition to the USD30 Bn in funding over the last nine years, at least 17 firms have achieved unicorn status, or reached valuations of over USD1 Bn.

Link

North America:

As per U.S. Bureau of Labor Statistics Producer Price Index data, construction input prices decreased 1.2% in October due to declining inflation. Overall construction costs remain 1.1% lower than a year ago, while nonresidential construction input prices dropped 0.7% since last year, according to the report. The drop in prices follows two consecutive months of slight increases, signaling relief around inflation.

Link

Europe:

Italian cement production saw a 5% increase YoY in August 2023, reaching an index value of 62 when compared with the base year of 2015. Cement prices increased by 9% YoY in August to an index value of 206 when compared with the base line of 2015. In terms of external trade cement imports fell 5% YoY to 153,062t in July 2023 with imports up 7% in the first seven months of 2023 when compared with the year-ago period.

Link

Europe:

Germany’s first publicly funded, 3D printed, multi-family house is under construction in the North Rhine-Westphalian city of Lünen. For the first time, the construction method is being combined with the conditions of public housing subsidies.

Located in the Ruhr area, the former center for coal mining in Germany, Lunen is a modest town of less than 100,000 inhabitants and is soon to be the host of the first 3D printed social housing apartment building in Europe.

Link

Europe:

Balfour Beatty Vinci have completed a successful trial of a digital measuring system for concrete across the HS2 project. Its success has led to a roll-out of the product across multiple HS2 sites, in a bid to carbon and driving efficiencies on the construction project. The digital measuring system, Verifi, enables real-time monitoring, measurement, and management of fresh concrete properties during transportation. Verifi optimises planning and coordination through GPS tracking of vehicles equipped with the technology. The real-time tracking capability is said to improve the management of concrete delivery, in addition to enhancing logistical processes on-site.

Link

Middle East:

As per Saudi Arabia’s General Authority for Statistics, the average price of iron in Saudi Arabia fell by 18.5% to 2882.95 SAR/tonne (USD 768/tonne) in the third quarter compared to 3538.50 SAR/tonne (USD 943/tonne) in the year-earlier period.
Average ready-mix concrete prices declined 3.66 % year-on-year to SAR 1,99.61 (USD 53) per cubic metre. On the other hand, the average cement price rose 1.8 % to SAR14.04 (USD 3.7) per 50 kg bag in the third quarter of 2023, compared to SAR13.79 (USD 3.6) per 50kg bag for the same period last year.

Link

Asia:

Cement sales in Vietnam declined by 18% YoY to 4,725,367t in October 2023 when compared with October 2022. In terms of exports, total volumes were up 26% YoY to 2,661,519t in October 2023. Clinker sales slipped by 1% YoY to 793,165t while cement sales increased by 43 %.

Link

Construction sector players

North America:

Fluor announced it earned USD206 Mn in the third quarter of 2023, compared to USD22 Mn in profits a year ago, with strong activity from its energy and urban solution segments, according to the company’s Q3 earnings report.
Revenue for the third quarter hit USD3.96 Bn compared to USD3.61 Bn a year ago, about a 9.7% increase. Backlog reached USD26 Bn, a 2.3% jump from USD25.4 Bn in the third quarter of 2022.

Link

North America:

Jacobs announced earnings of USD150 Mn for its 2023 fiscal fourth quarter, which ended Sept. 30, marking a 33.3% drop from its earnings of USD225 Mn a year ago, according to the company’s earnings report.
Revenue for its fourth quarter jumped to USD4.3 Bn compared to USD3.9 Bn in the prior year, up more than 10.3% due to strong activity in the advanced manufacturing, infrastructure, and water sectors.

Link

North America:

AECOM’s profits dropped 75.9% year over year to USD25.5 Mn in its fiscal fourth quarter ended Sept. 30 on USD3.8 Bn in revenue, a 12% increase from the year-ago period, according to its fiscal Q4 and full year 2024 earnings report. The Dallas-based global contractor’s total backlog stood at USD41.2 Bn, up 2% from the year-ago period. Despite headwinds from a strengthening U.S. dollar, the firm is confident about the outlook for infrastructure, resiliency, and energy transition work, which the firm is well-positioned to take advantage of, in its main markets in the U.S., U.K., Canada and Australia.

Link

North America:

Tutor Perini’s loss widened in the third quarter on similar revenue from a year ago, as the heavy civil contractor took several write-downs for its numerous legal disputes.
The Los Angeles-based firm lost USD36.9 Mn in Q3, compared to bleeding USD32.5 Mn during the same period in 2022, on USD1.06 Bn in revenue. That topline number was basically flat from the USD1.07 Bn the company reported for the third quarter last year. On a positive note, its USD10.6 Bn in backlog represented a 28% jump over the last 12 months.

Link

North America:

WSP’s earnings, revenue and backlog all climbed in the third quarter, according to its earnings report. Revenues grew across all reportable segments and the company is benefitting from various government stimulus efforts. The company reaffirmed the 2023 financial outlook it had raised in Q2.
The Montreal-based engineering and design company reported revenues of CAD3.6 Bn (USD2.65 Bn), up 24.2% from the same period last year. Its profits stood at CAD156.2 Mn (USD115 Mn), a 22.5% increase year over year, while backlog stood at CAD14.3 Bn (USD11 Bn), a 7.5% increase from the year-ago period.

Link

Europe:

Building materials group CRH has reached an agreement to sell its lime and limestone operations in Europe to SigmaRoc for EUR1 Bn (USD1.1 Bn). SigmaRoc is buying 16 of CRH’s operating locations across the UK, Ireland, Germany, Czech Republic, and Poland. The combined businesses generated sales of EUR580 Mn (USD636 Mn) last year. The transaction is structured in three phases, the first of which is expected to complete in early 2024 comprising the CRH’s lime operations in Germany, Czech Republic, and Ireland. The UK and Poland deals are expected to complete later in 2024.

Link

Europe:

Galliford Try acquired AVRS Systems Limited for GBP7 Mn (USD 8.8 Mn). AVRS is a specialist mechanical, electrical, instrumentation, control, and automation (MEICA) design and build contractor to the water and energy sectors.
AVRS been delivering specialist MEICA services to the nuclear sector since 2013 and holds full RISQS accreditation for mechanical and electrical works in the rail industry.

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