June 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 3.59
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 17.46
Dec-19 52 13.61
Jan-20 52.2 14.08
Feb-20 53.4 12.00
Mar-20 33.3 8.27
Apr-20 29.5 3.31
May-20 32 0.45
Jun-20 40 -0.66
Jul-20 40 -2.89
Aug-20 40 -6.79
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 -7.51
Mar-21 55.6 -3.85
Apr-21 57.9 -1.18
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 2.82
Oct-21 54.3 3.34
Nov-21 51.0 7.41
Dec-21 52.0 7.47
Jan-22 51.0 7.16
Feb-22 51.3 9.06
Mar-22 58.0 7.52
Apr-22 56.5 11.12
May-22 53.5 11.54
Jun-22 53.2 10.74
Jul-22 51.0 12.58
Aug-22 53.3 13.40
Sep-22 51.7 13.54
Oct-22 47.7 12.98
Nov-22 46.6 13.57
Dec-22 48.4 15.45
Jan-23 49.3 20.18
Feb-23 48.0 20.98
Mar-23 50.4 21.28
Apr-23 48.5 22.18
May-23 51.0 23.15
Jun-23 50.1 21.85
Jul-23 50.0 21.38
Aug-23 48.1 23.45
Sep-23 44.8 23.38
Oct-23 44.3 23.48
Nov-23 45.3 23.42
Dec-23 45.4 21.78
Jan-24 46.2 14.93
Feb-24 49.5 14.62
Mar-24 43.6 12.28
Apr-24 48.3 8.35

Construction spending unexpectedly fell for the second straight month in April on declines in non-residential output but single-family output reached the highest since August 2022.

Private residential output was up 0.1% m-o-m (8% y-o-y) in April; Building permits were down -3% m-o-m (-2% y-o-y).

Private non-residential output was down -0.3% m-o-m (8.3% y-o-y) in April. Architecture Billings Index (ABI) was up to 48.3 in April from 43.6 in March (< 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 7.70
Sep-20 3.91
Oct-20 1.28
Nov-20 1.84
Dec-20 4.71
Jan-21 11.84
Feb-21 24.91
Mar-21 8.31
Apr-21 -4.99
May-21 -10.93
Jun-21 -6.07
Jul-21 -9.99
Aug-21 -13.12
Sep-21 -17.42
Oct-21 -21.25
Nov-21 -22.64
Dec-21 -28.58
Jan-22 -24.11
Feb-22 -23.13
Mar-22 -17.49
Apr-22 -28.93
May-22 -36.03
Jun-22 -43.82
Jul-22 -44.15
Aug-22 -45.33
Sep-22 -45.13
Oct-22 -42.13
Nov-22 -43.85
Dec-22 -43.81
Jan-23 -40.34
Feb-23 -27.45
Mar-23 -19.16
Apr-23 -24.24
May-23 -28.66
Jun-23 -29.59
Jul-23 -29.12
Aug-23 -27.71
Sep-23 -21.52
Oct-23 -19.70
Nov-23 -11.31
Dec-23 -9.94
Jan-24 -11.57
Feb-24 -22.97
Mar-24 -28.35
Apr-24 -23.08

After several support measures have failed to stabilise the residential sector, the state has announced that local governments can instruct state-owned companies to buy homes at reasonable prices.

The 3-month moving average y-o-y decline in floor space started stood at -23% in April; floor space sold was down -21.6% y-o-y.

Europe

X Values PMI (LHS) Output (RHS, %, y-o-y)
Jan-19 50.6 0.6
Feb-19 52.6 6.3
Mar-19 52.2 6.7
Apr-19 52.1 3.1
May-19 50.6 2.6
Jun-19 50.8 1.7
Jul-19 50.6 1.1
Aug-19 49.1 0.9
Sep-19 50.5 0.7
Oct-19 50.7 0.7
Nov-19 50.6 0.8
Dec-19 51.3 -1.1
Jan-20 51.9 4.6
Feb-20 52.5 0.0
Mar-20 33.5 -15.5
Apr-20 15.1 -30.3
May-20 39.5 -11.1
Jun-20 48.3 -4.7
Jul-20 48.9 -3.5
Aug-20 47.8 -0.4
Sep-20 47.5 -2.7
Oct-20 44.9 -2.0
Nov-20 45.6 -0.8
Dec-20 45.5 1.2
Jan-21 44.1 -4.9
Feb-21 45.0 -5.5
Mar-21 50.1 17.8
Apr-21 50.1 42.5
May-21 50.3 12.6
Jun-21 50.3 5.1
Jul-21 49.8 3.6
Aug-21 49.5 -0.1
Sep-21 50 3.6
Oct-21 51.2 4.2
Nov-21 53.3 2.8
Dec-21 52.9 -0.1
Jan-22 56.6 6.2
Feb-22 56.3 9.2
Mar-22 52.8 3.8
Apr-22 50.4 3.1
May-22 49.2 3.3
Jun-22 47 2.6
Jul-22 45.7 1.7
Aug-22 44.2 2.8
Sep-22 45.3 1.0
Oct-22 44.9 1.1
Nov-22 43.6 1.3
Dec-22 42.6 -0.3
Jan-23 46.1 0.8
Feb-23 47.6 1.8
Mar-23 45.0 0.4
Apr-23 45.2 1.1
May-23 44.6 1.2
Jun-23 44.2 1.2
Jul-23 43.5 2.6
Aug-23 43.4 1.6
Sep-23 43.6 1.7
Oct-23 42.7 0.2
Nov-23 43.4 -0.4
Dec-23 43.6 2.5
Jan-24 41.3 -0.1
Feb-24 42.9 -1.4
Mar-24 42.4
Apr-24 41.9
May-24 42.9
         Jun-24

The residential sector in the Eurozone continues to be a major drag on overall construction but civil engineering continues to support the overall sector.

Eurozone construction is up 0.1% m-o-m (0% y-o-y) in March; Buildings are down -1.5% m-o-m (-3.9% y-o-y); Civil engineering is up 0.6% m-o-m (5.8% y-o-y).

The IHS Markit Eurozone Construction PMI rose to 42.9 in May from 41.9 in April (< 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 9.9
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 12.7
Nov-23 7.9
Dec-23 5.0
Jan-24 4.1
Feb-24 7.1
Mar-24 6.0
Apr-24 6.2

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

The weighted average of eight core industries’ output rose by 6.2% y-o-y in April; production of steel was up 7.1%, and cement was up 0.6% y-o-y.

 

Special trends

constructsteel advances disaster restoration dialogue in Istanbul

constructsteel convened in Istanbul on April 30, 2024, continuing talks from the 2023 Seoul conference on steel solutions for disaster prevention and reconstruction. The discussions centred on promoting steel in seismic-prone regions, engaging in talks with Turkey’s Ministry of Environment, Urbanisation & Climate Change to explore this initiative. Key points included steel’s crucial role in disaster prevention and recovery, emphasising its resilience and ductility against seismic forces, and the commitment of stakeholders to develop safer infrastructure in earthquake-affected areas.

Full article

Technical trends

The new real estate investment edge: Tech-enabled brand, CX, and loyalty

Traditionally, the real estate industry hasn’t prioritised customer experience in the same way other customer-facing industries do. The article emphasises how focusing on CX can be a major advantage for real estate investors. The key is to create a memorable and seamless journey for tenants throughout their entire journey, from initial search to move-out.
Defining the key moments in a tenant’s journey that have the biggest impact on their experience. Building a strong brand that resonates with tenants and creates a sense of community. This can be achieved by combining a strong brand identity with technology-enabled features that make life easier for tenants. By following these steps, real estate companies can build brand loyalty, foster resident loyalty, and ultimately increase their profits.

Full article

Construction news headlines

construction market and regulations

North America:

Construction backlog ticked up to 8.4 months in April, a 2.4% increase from the month prior. The jump in April marks the second consecutive month of backlog growth, following two months of contraction at the start of 2024. However, backlog still trails the April 2023 level by 0.5 months.

Link

South America:

Seven transport infrastructure projects are planned in Ecuador with a total value of US$2.3 billion. The development program is being planned by the Ecuador Government. International investors are being sought to help provide the necessary financial backing. Ecuador’s road network will benefit massively from the work.
Six road projects are planned for the program which will be carried out under the PPP model. Bidding for two of the projects will commence in 2024.

Link

Europe:

In April, Poland’s construction output fell 2% year-on-year but came in stronger than consensus (-5% YoY), following a 13.3% YoY decline in March. The yearly decline was much smaller than that seen a month ago, likely as a result of more favourable calendar effects (more working days) and those related to the pattern of holidays. Activity in areas related to public investment (i.e., civil engineering construction) improved from -17.8% YoY in March to +7.8% YoY in April. However, it should not be assumed that the scale of such a rebound is sustainable.

Link

Europe:

Italy’s construction sector production has accelerated since mid-2023 and expanded 9% YoY in the first two months of 2024. Infrastructure and local public sector works are expected to be the key drivers of the Italian cement demand in 2024. The government’s National Recovery and Resilience Plan (NRRP), which sees EUR23.74Bn (USD25.8Bn) in funding from the European Union’s Recovery and Resilience Facility, aims to tackle years of underinvestment. The funding is specifically for the modernisation of roads, railways, ports, and airports. Infrastructure expenditure is forecast to average growth of 1.7% YoY through to 2031.

Link

Middle East:

Saudi Arabia is expected to over nearly 1,185 projects in the next few years with a combined value of more than USD240Bn. The projects would be offered by the government to private investors in Saudi Arabia and other countries within its Vision 2030 economic diversification scheme launched nearly eight years ago.

Link

Middle East:

Doha, Qatar: The Gulf Cooperation Council (GCC) project awards increased by 20.3% year-on-year (y-o-y) during first quarter (Q1) of 2024 to reach USD45Bn as compared to USD37.4Bn during Q1 2023. The consistent elevated trend in GCC contract awards underlines the entrenched resolve of GCC governments to see through their diversification projects, as well as state funding support. The total value of contracts awarded in Qatar increased by 68.5% y-o-y to reach USD6.1Bn during Q1 2024 as compared to USD3.6Bn in Q1 2023. The growth in contract awards was primarily due to the jump in value of projects awarded in Qatar’s oil sector during Q1-2024 which represented 80.5% of the total contracts awarded in the country during the year.

Link

Asia:

New bridge projects costing around US$724 million are planned for Ho Chi Minh City in Vietnam. The Can Gio Bridge will be part of a new 7.3km link between Can Gio District and Nha Be District and will replace the existing Binh Khanh Ferry. The project will be handled under the PPP format, with the cable-stayed bridge featuring three lanes in either direction. The planned Thu Thiem 4 Bridge will also feature a cable-stayed design.

Link

Building materials and construction technologies

North America:

Construction input prices increased 0.5% in April due to inflation and energy costs. The jump in April marks an increase in input prices for every month of 2024 so far. Both overall and nonresidential construction costs remain 2.3% and 2.2% higher, respectively than a year ago.

Link

Middle East:

Saudi Arabia’s building materials supply is set to get a boost with the signing of a deal between the National Housing Co. and a leading Chinese construction firm. The agreement with China’s CITIC Construction Group seeks to establish an industrial city and logistic zones for building materials, comprising twelve factories, with the objective of securing supply chains for the NHC’s housing projects. NHC finalised the deal during the official visit of Minister of Municipal and Rural Affairs and Housing Majid Al-Hogail to China.

Link

Construction sector players

North America:

Granite recorded a year-on-year increase in revenue in its construction operations of 18% in Q1 2024, helped by better weather and a higher level of committed and awarded projects. Revenue within its materials segment was up 36%, as total revenue increased by UDD112Mn to USD672Mn.
Gross profit was up USD22Mn to USD54Mn in Q1 2024, although the firm made a net loss of USD31Mn as selling, general, and administrative expenses rose USD15Mn to USD88Mn for the period. The increase was mainly due to USD7Mn of additional stock-based compensation expense and USD5Mn of expenses from acquired businesses year over year.

Link

Europe:

Skanska reported a smaller-than-expected rise in operating earnings for the first quarter as the business recorded a year-on-year fall, hit by costs in Britain. The construction group’s operating earnings rose to CZK497Mn (USD45.6Mn) from a year-ago. Market weakness, especially in commercial and residential real estate development, has also weighed on Skanska’s profits over the past year.

Link

Europe:

Heidelberg Materials UK acquired B&A Group, one of the leading construction soil and aggregate recycling companies in southwest England. The Bristol-based company employs a team of seventy and specialises in the supply of recycled and primary aggregate as well as site clearance, earthworks, land remediation, and sustainable land regeneration.
The acquisition of B&A Group is another example of the company’s commitment to reaching net zero by conserving natural materials and promoting the circular economy by recycling, reusing, and reducing the use of primary raw materials.

Link

Oceania:

Lendlease has announced that it is to sell some of its overseas business, including its construction operations in the US, UK, and Europe. The announcement was made as part of a company overhaul as it looks to free up as much as AUD4.5Bn (USD3Bn) of capital. The move creates uncertainty around a litany of unfinished projects around the world, including in Malaysia, China, US, UK, and Italy.

Link

Africa:

Afrimat boosted revenue by 24% in FY23-24 as Lafarge integration continues. The group’s performance was supported by a revenue increase of 23.9% from ZAR4.9Bn (USD269Mn) to ZAR6.1Bn (USD335Mn). Operating profit increased by 19.8% to total ZAR12Bn (USD640Mn), delivering an operating profit margin for the group of 18.9%.

Link

Asia:

Birla Corp continued its steady progress in the first three quarters of fiscal 2023-24 to end the year on a high, with record cement sales by volume and a 127% growth in net profit in the March quarter, despite unusually weak market conditions. The company’s cement division achieved a capacity utilisation rate of 97% for the March quarter.
Consolidated net profit for the March quarter came in at INR1930Mn (USD23.11Mn), representing YoY growth of 127%, as power and fuel costs continued to be moderate. Consolidated revenue for the quarter was up 6.8% from the same period last year, even as realisation from cement in the March quarter came under intense pressure and fell 1.6%.

Link

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