February 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 21.2
Dec-23 45.4 19.1

Despite pressure on the housing market  owing to elevated borrowing costs and shortage of inventory, demand for new build in the single family segment is supporting housing construction. Federal tax credits expected to support semiconductor manufacturing.

Private residential output up 1.4% m-o-m (6.8% y-o-y); Building permits up 1.8% m-o-m (6% y-o-y).

Private non-residential output down -0.2% m-o-m (19% y-o-y). Architecture Billings Index (ABI) edges up to 45.4 in December from 45.3 in November (< 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

Continued policy relaxation of the commercial property sector and further support for affordable housing are critical to engineering a soft landing in the property sector in 2024. Infrastructure spending supports overall construction sector.

The 3 month moving average y-o-y growth in floor space started fell to -9.9% in December; floor space sold was down -22% y-o-y. Railway investment up 25% in 2023.

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
Jan-23 41.3

Eurozone construction struggling due to the ECB’s aggressive monetary tightening cycle as demand for large purchases and projects remains lacklustre.

Eurozone construction down -1% m-o-m (-2.1% y-o-y); Buildings down -1.2% m-o-m (-2.4% y-o-y); Civil works down -0.4% m-o-m (0.1% y-o-y).

The IHS Markit Eurozone Construction PMI dropped to 41.3 in January 2024 from 43.6 in December (< 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 3.8

India: Core sector growth tapers in December 2023 on higher base but underlying trend in activity is positive.

Weighted average of eight core industries output rose by 3.8% y-o-y in December; production of steel up 5.9%, cement up 1.3% y-o-y.

 

Special topic

Advancing steel solutions – global efforts in construction

Our new chair, Prof. Olivier Vassart, sheds light on the latest advancements in steel solutions worldwide! From energy-efficient buildings to decarbonisation efforts, he highlights how constructsteel facilitates global exchange among steel producers. Learn from Vassart how the industry is addressing shared challenges, embracing alternative materials like timber, and providing disaster-prevention solutions amidst climate change. Join us in shaping the future of construction with steel’s strength, flexibility, and sustainability.

Full article

Technical trends

From trials to triumphs in building materials circularity: Takeaways from Davos

McKinsey hosted a discussion at the 2024 annual meeting of the World Economic Forum in Davos, Switzerland, on “Transitioning from trials to triumphs in building materials circularity.” The panel featured participants across the built environment value chain, including major global construction and real estate companies. Three key themes emerged: the clear opportunity for environmental impact and a business case for circularity in the built environment, the critical importance of value chain integration and digitalisation, and the urgency to scale and invest in new circular business models.

The panel emphasised the need for collaborative workflows and highlighted strategies for stakeholders to create circular business models, aligning practices with sustainability goals and inducing broader industry changes.

Full article

Construction news headlines

construction market and regulations

North America:

US’ total construction starts surged 20% in December to a seasonally adjusted annual rate of USD 1.12Tn after three months of falling activity in September, October, and November. Despite the big bounce back during the last month of the year, total construction activity remained 4% lower compared to 2022. 2024 provides promise that positive momentum will continue to build, largely due to the expectation of lower interest rates.

Link

North America:

Construction backlog ticked up in December to 8.6 months due to improving financing availability. The metric is still rebounding from a backlog level of 8.4 months in October, its lowest point since the first quarter of 2022. The December increase, however, sparked some confidence among contractors, due to two consecutive months now of backlog growth.

Link

Europe:

The European Bank for Reconstruction and Development (EBRD) invested EUR 1.3Bn in Poland in 2023, making it the EBRD’s third largest market. This surpasses the previous record of EUR 990Mn invested in 2022. One of the notable investments was EUR 140Mn for the construction of Baltic Power, Poland’s first offshore wind farm. This project is part of the EBRD’s support for renewable energy in Poland, which will add more than 1.3 GW to the country’s renewable energy capacity in the short to medium term. In addition, the Bank invested 75% of its funds in low-carbon transition projects, including e-waste recycling and green finance instruments. The Bank continued to focus on Poland’s capital and financial markets as well as direct equity deals, including a deal with integrated renewable energy developer R.Power (EUR 75Mn).

Link

Europe:

The European Commission and the African Development Bank have formalised a new agreement to boost investment in infrastructure projects in Africa. The European Union has increased its co-financing of operations with the African Development Bank to EUR 972Mn (USD 1.1Bn). The two parties said that figure would increase further following the signing of a new Financial Framework Partnership Agreement by European Commission President Ursula von der Leyen and African Development Bank Group President Dr Akinwumi Adesina. The partnership would open opportunities for both organisations to deliver new joint financing for infrastructure projects.

Link

Middle East:

Iraq has asked Chinese companies to bid for projects within a USD 17Bn scheme to build a 1,200 km long rail line stretching from South Iraq towards the border with Turkey in the North. Iraqi Transport Minister Razzak Al-Saadawi sent a letter to the Chinese embassy in Baghdad offering a role for companies from the Southeast Asian giant in the ‘Development Road’ which involves one of the largest rail projects in the region. Beijing would hold a conference to highlight investment opportunities within the Development Road, which also includes a parallel motorway for passengers and freight trucks.

Link

Middle East:

Jordan has invited investors for six new projects including a tourism village at an estimated cost of USD 20Mn. The projects, with a total value of nearly USD 58Mn, were listed in an online investment platform launched by the Investment Ministry in late 2023 to attract capital as part of reforms intended to stimulate the economy. The projects include three in the tourism sector and three in the food industry, according to the portal, which showed the main project is a tourism village in the capital Amman.

Link:

Asia:

Thailand’s Transport Ministry revealed the transportation projects for this year include 64 projects set to become operational and 31 new projects on which construction is slated to commence. There are 57 new investment projects for 2025 with a combined investment value of BHT 263Bn (USD 7.5Bn). Some of the major projects this year include the construction of the Bangkok-Ubon Ratchathani high-speed railway, which is expected to be completed in 2028, and the expansion of the Bangkok Mass Rapid Transit (MRT) system, including the construction of the Purple Line extension, which is expected to be completed in 2026. Link

Link:

Building materials and construction technologies

North America:

Construction input prices fell 0.6% in December largely due to plunging oil prices. The decrease marks three consecutive months of price moderation, though volatility still remains in the cards. Overall construction costs remain 1.2% higher than a year ago, while nonresidential construction input prices are 1.6% pricier. Despite continued materials price moderation and other positive momentum around inflation, the construction materials cost outlook still carries inherent risks.

Link

North America:

Although Road and bridge construction costs continue to be high compared to pre-pandemic levels, the prices of key materials, like concrete, asphalt, and diesel, have been coming down, providing some much-needed relief for builders. However, that doesn’t mean inflation is done with the industry, especially as labor woes continue. The cost of highway construction projects jumped 53.8% in the first quarter of 2023 from the fourth quarter of 2020.

Link

Europe:

UK’s latest Builders Merchant Building Index report shows sales volumes were down 11.5% in October 2023. Builders merchants’ takings were down 4.0% in October 2023 compared to the same month in 2022, but with prices 8.4% higher than a year before, the amount of product sold was down 11.5%. Despite the reduction in takings, eight of the 12 product categories sold more in October 2023 compared to October 2022, including Decorating (+10.8%), Workwear & Safety wear (+10.4%), Ironmongery (+7.0%) and Kitchens & Bathrooms (+4.7%). However, Landscaping was down 6.4% and Timber & Joinery Products was down 9.7%.

Link

Europe:

Cement consumption in Spain showed no growth in 2023, settling at 14.5Mt, representing a drop of 3% YoY and five years of stagnation. With an installed capacity of approximately 47Mta, capacity utilization rates are low and a country with the population and GDP of Spain should have a stable demand of around 20Mt. The country’s cement association called for greater implementation of public works, more prominence of private-public partnerships and policies that encourage the construction of social housing and the investment in hydraulic works.

Link

Middle East:

A new building in Dubai has been officially recognized as the world’s biggest 3D-printed villa. Local company 3DXB Group used additive manufacturing techniques to construct a four-metre-high, 300 sqm residential villa out of concrete in the Al Awir 1 area of Dubai. 3DXB Group is committed to supporting the country’s ambitious goal of constructing 25% of buildings using 3D printing technology by 2030.

Link

Asia:

ABB Robotics and Simpliforge Creations, an additive manufacturing solutions company, are collaborating to advance 3D Printing technologies for the Indian construction sector. The collaboration will enable construction companies to build structures faster, more sustainably and safely. The technology has the potential to transform the construction landscape across industrial, defense, commercial and residential sectors, especially disaster affected areas set for rapid rehabilitation and infrastructure reinstatement.

Link

Construction sector players

North America:

Holcim has announced its intention to list its North American business in the US with a full capital market separation. This process will create the leading pure-play building solutions company in the region. The newly-listed business will be committed to driving long-term growth in the rapidly expanding North American market and unlocking value for all its stakeholders.

Link

Europe:

Galliford Try upgraded its profit forecast for the year with the firm saying it expects its bottom line to now be 5% above previous estimates. The firm will release interim results on 6 March, expected to be between GBP 1.43Bn (USD 1.82Bn) and GBP 1.49Bn (USD 1.9Bn) for the year to June 2024. But this is now set to be 5% higher with profit due to rise by a similar amount. The pre-exceptional pre-tax profit is expected to be somewhere between GBP 25.2Mn (USD 32.16Mn) and GBP 28.1Mn (USD 35.86Mn) for the full year.

Link

Asia:

Chinese construction companies will invest up to USD 7Bn in infrastructure projects as part of an agreement over their Sicomines copper and cobalt joint venture in the Democratic Republic of Congo. Both parties agreed to maintain the current structure of the shareholding, while the Chinese partners, Sinohydro and China Railway Group, will pay 1.2% of royalties annually to Congo, according to a statement.

Link

Asia:

China National Building Materials (CNBM) has issued a profit warning for 2023. The company’s unaudited profit attributable to the equity holders of CNBM is forecast to decline by 65% in 2023, compared to the previous year. The contraction is being attributed to a fall in the sales price of cement, commercial concrete and glass fibre, and lower sales volumes of cement and commercial concrete. The company has also noted a decline in performance attributed by associates and a reduction in gains on disposal of assets, although this has reportedly been partly offset by a lower cost of sales in CNBM’s cement and commercial concrete businesses.

Link

Asia:

UltraTech Cement Ltd released its financial results for the quarter ended 31 December 2023, reporting consolidated net sales of INR 164,870Mn (USD 1.9Bn) compared with INR 152,990Mn (USD 1.8Bn) of the corresponding period of the previous year. Profit after tax was INR 17,770Mn (USD 214Mn), the highest-ever quarterly figure as compared to INR 10,580Mn (USD 127Mn) in 3QFY22-23. The domestic grey cement sales volume rose 5% YoY and 1% QoQ, respectively.

Link

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