March constructsteel newsletter

Construction market trends

United States

X Values Permits (LHS, SAAR Millions) Output (RHS, SAAR USD billions)
Jan-19 1.254 517390
Feb-19 1.302 516797
Mar-19 1.291 517696
Apr-19 1.298 522630
May-19 1.338 528461
Jun-19 1.301 540442
Jul-19 1.347 552575
Aug-19 1.528 559755
Sep-19 1.491 563783
Oct-19 1.538 567704
Nov-19 1.522 580112
Dec-19 1.461 586250
Jan-20 1.500 598551
Feb-20 1.440 609465
Mar-20 1.348 617132
Apr-20 1.050 595620
May-20 1.253 583199
Jun-20 1.329 589685
Jul-20 1.526 609849
Aug-20 1.564 641103
Sep-20 1.643 662353
Oct-20 1.622 684180
Nov-20 1.713 702717
Dec-20 1.760 725025
Jan-21 1.866 748052
Feb-21 1.700 742853
Mar-21 1.731 757335
Apr-21 1.714 766640
May-21 1.68 779374
Jun-21 1.644 792075
Jul-21 1.618 806484
Aug-21 1.837 813307
Sep-21 1.636 819594
Oct-21 1.727 828907
Nov-21 1.775 852881
Dec-21 1.948 881281
Jan-22 1.898 912687
Feb-22 1.817 931898
Mar-22 1.877 949368
Apr-22 1.795 965838
May-22 1.708 969636
Jun-22 1.701 955943
Jul-22 1.658 929672
Aug-22 1.586 907606
Sep-22 1.588 891657
Oct-22 1.555 877990
Nov-22 1.402 865170
Dec-22 1.409 853718
Jan-23 1.354 856046
Feb-23 1.482 847507
Mar-23 1.437 846865
Apr-23 1.417 824707
May-23 1.496 853896
Jun-23 1.441 860888
Jul-23 1.443 855438
Aug-23 1.541 866550
Sep-23 1.471 872038
Oct-23 1.498 887278
Nov-23 1.467 886493
Dec-23 1.493 899079
Jan-24 1.489 900846

Construction activity unexpectedly declined in January due to falling public outlays, but new construction in the single family segment supportive despite high mortgage rates; manufacturing construction up and taking advantage of policy to bring semiconductor manufacturing back to the US.

Private residential output up 0.2% m-o-m (5.2% y-o-y) in January; Building permits down -0.3% m-o-m (10% y-o-y).

Private non-residential output down -0.1% m-o-m (15.2% y-o-y) in January. Architecture Billings Index (ABI) up 46.2 in January from 45.4 in December (< 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

*Update for China is not available in January and February.

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 0.02
Jan-24 41.3
Feb-24 42.9

Construction leading indicators signal a softer than expected decline in activity.

Eurozone construction up 0.9% m-o-m (2.1% y-o-y) in December; Buildings up 1.2% m-o-m (1.7% y-o-y); Civil works down -0.7% m-o-m (4.9% y-o-y).

The IHS Markit Eurozone Construction PMI rose to 42.9 in February from 41.3 in January (< 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 12.7
Nov-23 7.9
Dec-23 4.9
Jan-24 3.6

India’s core sector growth sees slowest gain since October 2022.

Weighted average of eight core industries output rose by 3.6% y-o-y in January; production of steel up 7.0%, cement up 5.6% y-o-y.

 

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Construction news headlines

construction market and regulations

North America:

Total construction starts ticked up 1% in January to a seasonally adjusted annual rate of USD 1.16Tn. Even with December’s big bounce where starts rebounded 20% off of a 10-month low in November, the marginal uptick in January means construction activity is still just barely treading water over the past year and is about 1% lower than in January 2023. Construction starts will continue to struggle early on in 2024 as higher interest rates and tight credit standards are slowing down projects moving through the planning cycle to start.

Link

North America:

Backlog dipped slightly to 8.4 months in January. This is the second consecutive decrease in the reading. Despite the industrywide drop, backlog increased to 10.9 months in the heavy industrial category, the highest on record for that sector. That figure is also 2.5 months higher than in January 2023. Backlog is down year over year in the commercial and institutional as well as infrastructure categories.

Link

Europe:

As government economic stimulus packages for dealing with COVID gradually faded out in 2023, Europe’s construction and infrastructure sector witnessed a fall in demand and saw the collapse of many developers. Although inflation is set to decline, the construction output in Europe is still declined by 2.8% in 2023 with a further 2.7% drop forecast in 2024. And while the sector sees demand slipping away, the EU still requires the sector to work on a greener footprint.

Meanwhile, Euroconstruct has downgraded its forecasts. It estimates that construction activity in the EU-15 to have declined by 1.7% in 2023 and 2.3% in 2024. Germany and Scandinavia have slipped compared to earlier forecasts and are now predicted to see a -2.2% and -5.7% decline in 2024.

Link

Africa:

China has presented a bold plan to invest over USD 1Bn in refurbishing the strategic railway connecting Zambia’s copper heartland with the Tanzanian port of Dar es Salaam. The proposal was officially handed over by Beijing’s ambassador to Zambia. This substantial investment would be spread over the coming years, indicating a long-term commitment to enhancing the railway infrastructure. The plan targets the rehabilitation of the Tazara railway, a vital link that has suffered from neglect since its construction by China in the 1970s.

Link

Middle East:

Saudi Arabia’s construction sector has recorded high growth over the past two years, and it will remain strong in 2024 as it benefits from rising public capital expenditure. The construction sector, which accounts for nearly 9.2% of non-oil GDP, saw another solid rate of growth in the year to third quarter of 2023, though at 3.9% this was markedly softer than the 8.8% registered in the same period of 2022.

Link

Building materials and construction technologies

North America:

Construction input prices ticked back up 1% in January largely due to increases in energy costs, as per the new Associated Builders and Contractors’ analysis of U.S. Bureau of Labor Statistics Producer Price Index. The jump marks the first overall price increase after three months of moderation, highlighting the ongoing presence of material price volatility. Overall construction costs remain 0.4% higher than a year ago, while nonresidential construction input prices gained 0.7% during the last 12 months.

Link

Europe:

Spain’s Cementos Molins announced the launch of low-carbon footprint cements and concretes with the goal of achieving carbon neutrality by 2050. Under the umbrella of its ‘Sustainability Roadmap 2030’ strategy, the company is introducing two new portland cement products that are being used in their concrete. The new cements and concretes represent a reduction in CO2 emissions of up to 25% compared to products made with the current Type I cement of the same strength category.

Link

Europe:

UK construction costs are predicted to rise by up to 3.8% in 2024. After a 4.1% increase in UK construction costs in 2023, there will not be much of a slow-down in price rises this year. The construction costs in the UK are expected to go up by between 3% and 3.8% this year. This is enough to impede the delivery of projects or lead to substantial rescoping.

Link

Middle East:

The building industry in the Middle East will face fresh challenges this year, with construction costs predicted to rise by up to 7%. Construction costs in the UAE are set to increase by 2-3% and in Saudi Arabia by 5-7% in 2024, following an increase of 3% and 7%, respectively, last year. The cost increases will be experienced across every one of its operating regions in the year ahead. Inflation remains the primary challenge for the construction industry and the dominant driver of cost increases. Towards the end of 2023, inflation appeared to be easing. However, the situation remains changeable across the Gulf, with inflationary pressures persisting.

Link

Asia:

An international pledge to collaborate on sustainability and the development of low-carbon cement has been signed by the China Cement Association (CCA), which represents more than 50% of the world’s cement production. The CCA has joined forces with the Global Cement and Concrete Association (GCCA), the latter’s members account for 80% of cement production capacity outside of China. The pledge includes an agreement to work together on sustainability, and the low-carbon development of the cement and concrete industry. The agreement will also see the development of a whole value chain China Cement Carbon Neutrality Roadmap which will set out a commitment and pathway to fully decarbonise the cement industry in China.

Link

Construction sector players

North America:

Jacobs posted earnings of USD 171.61Mn for its first quarter 2024, which ended Dec. 29, marking a 26.5% increase from its earnings of USD 135.65Mn a year ago. Revenue for its first quarter jumped to USD 4.2Bn compared to USD 3.8Bn in the prior year, up about 9.5%, due to water infrastructure and advanced manufacturing projects. The company reported its backlog reached USD 29.6Bn, about a 4.7% jump from last year. That increase stems from growth in all of Jacobs’ business divisions.

Link

North America:

Fluor announced it lost USD 21Mn in the fourth quarter of 2023, compared with USD 9Mn in profits for the same period last year. Revenue for the fourth quarter hit USD 3.82Bn compared to USD 3.71Bn a year ago, about a 3% increase. Backlog reached USD 29.44Bn, a 13% jump from USD 26.05Bn in the fourth quarter of 2022. The firm’s loss stemmed from a USD 69Mn settlement of claims on the Gordie Howe bridge project, a USD 93Mn loss on a sale related to its Stork business in Latin America and a significant decrease in profit from its Energy Solutions segment.

Link

North America:

AECOM’s profits and revenue rose in the first quarter amid strength across its markets, while backlog dipped compared to the same period last year due to the removal of two projects from its construction management pipeline. The contractor saw profit rise 7.4% year over year to USD94 million in the first quarter on USD 3.9Bn in revenue, a 15% increase from the year-ago period. AECOM’s backlog stood at USD 39.8Bn, down 2.5% from Q1 2023.

Link

North America:

Cemex reported sales of USD 17.4Bn in 2023, up by 8% year-on-year from 2022 levels. Meanwhile, the group’s operating EBITDA rose by 20% to USD 3.35Bn. The strong product pricing in all markets and slowing costs inflation compounded the positive effects of its growth investment strategy. On a consolidated basis, Cemex’s cement sales volumes fell by 6% to 51.7Mt from 55.1Mt. They rose by 3% in Mexico but fell by 10% in Europe, Middle East, Africa, and Asia, by 3% in South and Central America and the Caribbean and by 13% in the US.

Link

Europe:

Morgan Sindall Group revenue for the year to 31st December 2023 was up 14% to GBP 4,118Mn (USD 5228Mn ). Profit before tax was up 69% to GBP 143.9Mn (USD 183Mn). An exceptional Building Safety credit of GBP 2.2Mn (USD 2.8Mn) was recognised in the year, compared to a charge of GBP 48.9Mn (USD 62Mn) in 2022. The credit arose as a result of a better estimate of expected costs and recoveries, the board said. This movement was the main driver of the 69% increase in pre-tax profit. However, underlying operating profit was still up by 2% at GBP 141.3Mn (USD 180Mn). End of year net cash was GBP 461Mn (USD 585Mn) while average daily net cash was GBP 282Mn (USD 358Mn).

Link

Europe:

French construction group Vinci has reported a 12% increase in revenue to EUR 68.8Bn (USD 74.2Bn) in 2023 but has warned that growth in 2024 is likely to be at a slower pace. Vinci’s order book stands at EUR 61.4Bn (USD 66.2Bn), up 7% on 2022. Its operating income from ordinary activities was up 12.1% to EUR 8.4Bn (USD 9.1Bn). The energy transition and continued digitalisation also helped to drive growth in Vinci’s energy business, which accounted for almost 40% of the group’s total revenue. Revenue within the construction business rose 9% on a like-for-like basis as compared to 2022, totaling EUR 31.5Bn (USD 34Bn).

Link

Australia:

Saint-Gobain has approached the board of CSR Ltd, a leading Australian building materials company listed on the Australian Securities Exchange, with a non-binding indicative offer to acquire all of CSR’s issued share capital by way of a scheme of arrangement at an offer price of AUD 9.00 (USD 5.90) cash per share.

Under Saint-Gobain’s proposal, CSR would be entitled to pay a final dividend of up to AUD 0.25 (USD 0.16) per share for its financial year ending 31 March 2024, which would be deducted from the cash offer price. The offer is subject to confirmatory due diligence, and the entry into binding transaction documents.

Link

Asia:

India’s JK Lakshmi Cement reported a 69% rise in third-quarter profit. The construction materials arm of JK Group’s net profit after tax rose to INR 1.24Bn (USD 15Mn) for the quarter ended Dec. 31, from INR 735.9Mn (USD 8Mn) a year earlier. Power and fuel costs, JK Lakshmi’s biggest expense, fell around 25%. The housing and infrastructure sectors have seen a demand surge, aided by higher government spending ahead of the national elections, boosting cement makers’ bottom lines. Cement prices also saw a 2.5% sequential rise during the quarter, helping cement makers earn more from their sales.

Link

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