February constructsteel newsletter

The price of concrete, cement and bricks in Europe is set to continue rising, despite falling energy costs. In general, the price of timber and of metal ores has fallen steadily since peaking in the middle of 2022. This is largely due to an easing in supply chain issues for these materials, as well as a fall in demand, as economic forecasts for European countries has lowered.

The number of construction companies in the UK has grown by 17% in the past five years. Demand for construction remains high in the country; despite the recent economic difficulties, 55,000 new construction businesses had been registered over the analysis period. Between 2021 and 2022 alone, more than 15,000 new businesses were established. The findings seem to corroborate other latest reports which predict that an extra 225,000 construction workers will be required in the UK by 2027.

The cost of materials and labour for construction have increased more steeply in the UK than the EU since the Brexit referendum. Between 2015 and 2022 the cost of construction materials including cement, timber and steel increased by 60%. At the same time, the cost of labour in the UK went up by 30%. In the EU, where similar pressures including supply chain and Covid problems applied, the cost of materials went up 35% while labour in countries such as Denmark and the Netherlands went up by just over 14%.

The US Department of Transportation’s Federal Highway Administration has announced the first round of Large Bridge Project Grants from President Biden’s Bipartisan Infrastructure Law’s competitive Bridge Investment Program. The program is reported to be one piece of the Administration’s largest dedicated investment in highway bridges since the construction of the Interstate highway system. Approximately US$40 billion over five years will help repair or rebuild ten of the most economically significant bridges in the country, along with thousands of other bridges.

Plunging prices for diesel fuel, lumber, and steel slowed inflation for materials and services used in construction in December in the US, but relief may be short-lived. While producer price indexes for construction inputs fell in December, they still outpaced other inflation measures for the year. In addition, some prices have already turned higher in January. The producer price index for diesel fuel fell 28.7% in December, the index for lumber and plywood was down 3.7%, and the index for steel mill products slid 2.7%. In contrast, the index for ready-mix concrete increased 1.4% for the month and 13.6% for the year.

The housing industry downturn is poised to push the U.S. economy into a mild recession this year, according to the National Association of Home Builders. Elevated inflation and mortgage rates coupled with the high building material and construction costs that have plagued the industry since the start of the COVID-19 pandemic continue to take a toll on residential contractors.

Argentina’s government launched the construction tender phase for a gas pipeline megaproject that will eventually extend more than 1,000 kilometres from the southwest to north of Buenos Aires. Néstor Kirchner Pipeline would be the largest natural gas project in Argentina in the last four decades. The first stage of the project is due to cost US$1.5 billion, beginning in August and ending in 2024.

Mexico’s construction sector posted its biggest recovery since its downturn started in early 2020 due to the pandemic. Latest results showed month-on-month growth of 2.5% in November 2022, following a 0.1% increase in October and a decrease of 0.2% in September. The year-on-year expansion in November was 4.7.%. Buildings represented 38.9% of the month’s total output, followed by transport and urbanization works (20.9%).

The Indian construction industry is expected to receive a significant boost in 2023, thanks to a sharp increase in public spending. In its budget for the financial year April 2023 to March 2023, the Indian government promised a 7.5% increase in spending, from £451bn to £458bn. The capital investment outlay for the forthcoming financial year is equivalent to 3.3% of India’s GDP.

The Indian construction industry is expected to receive a significant boost in 2023, thanks to a sharp increase in public spending. In its budget for the financial year April 2023 to March 2023, the Indian government promised a 7.5% increase in spending, from £451bn to £458bn. The capital investment outlay for the forthcoming financial year is equivalent to 3.3% of India’s GDP

Thailand will start construction of its US$8.8 billion U-Tapao aviation city this year. The project will begin early in 2023 and will involve turning the Vietnam-war-era U-Tapao airport into the third main international airport in the country. U-Tapao will link with a budget terminal, Don Muang airport, and the country’s main Suvarnabhumi airport.

China’s Xinjiang region in the country’s northwest, will invest $12.3 billion in road construction in 2023. The money will be split between 66 projects, 22 of which are due to be completed this year. In 2022, Xinjiang spent $11 billion on road construction, with 11,000km of roads currently connecting 90% of the region’s locales.

Indonesia plans to start building 184 residential towers in this year’s second quarter to house 14,500 civil servants at the new capital, called Nusantara. The work will be procured as a public-private partnership and officials are in talks with three private developers. Projected to cost $32bn, the mega scheme will rely on private investment for around 80% of its funding.

With the domestic housing market entering a period of stagnation, many construction companies of South Korea have chosen Vietnam as their destination. With the National Master Plan to 2030 with a vision to 2045, Vietnam is striving to become an advanced country by 2045. To this end, it plans to invest in transportation, energy, information and communications technology (ICT), and infrastructure. The scale of the infrastructure industry is also expected to grow at an average annual rate of 9.8% from $5.2 billion last year to $11 billion in 2030.

The construction sector in Saudi Arabia maintained its growth momentum in the third quarter of 2022 with contracts worth $6.7 billion awarded during the period. Multiple Vision Realization Programs in the fields of tourism, housing, and infrastructure development drove the sector’s growth in the Kingdom. Despite a 6% year-on-year drop in the number of contracts, the total value is on track to surpass the sector’s 2021 performance.

PHP Ventures and Modulex, a UK-based manufacturer of 3D volumetric steel modular buildings, have announced a plan to combine a deal that will enhance the company’s ability to construct healthcare, residential, office, and more structures in emerging markets where time and costs are in short supply. Modulex offers advanced 3D volumetric steel modular buildings embedded with EmergingTech such as AI, Blockchain and IoT – Modular Buildings 2.0.

Construction robotics firm Kewazo grabbed another $10 million in a Series A funding round Jan. 23, doubling to $20 million its total seeding to date. Kewazo’s Liftbot machine is an automated hoist that brings material to height for scaffolding assembly, a $50 billion industry in which the firm says more than 80% of projects are still undertaken completely manually. But it can also be used as a robotic hoist for other materials.

Modular housing company Plant Prefab has secured $42m in Series C and other funding to support expansion plans. The latest funding would let the company finish its solar-powered automated factory, the 270,000-sq-ft Tejon Ranch Hub in Arvin, California, billed as the first hybrid panel and module factory in the US.

Modular builder Volumetric Building Companies has developed a steel-framed modular prototype for the “Fairfield by Marriott” hotel brand for use in European cities. Offsite construction will cut a hotel’s average construction time by eight months, allowing developers to start operating sooner. Each steel-framed module contains a fully furnished room, bathroom, hallway, and corridor section. The system is suitable for hotels up to 20 storeys.

Century Communities, one of the top US homebuilders and an industry leader in online sales, has launched its first community of 3D printed homes, under the Century Complete brand. Century Complete’s robotically-printed homes boast high-quality construction with finishes like granite countertops and stainless-steel appliances, and are now selling for upwards of $200,000. Homebuyers can choose from three single-story floor plans – offering up to four bedrooms and 1,901 square feet.

Hensel Phelps has launched Diverge, a new investment company that works directly with technology startups to mold industry-changing innovation. The portfolio is already populated with 14 startups, including Green Badger, a LEED and ESG reporting platform; Constructn.ai, an AI-powered construction management platform; and financial management software provider Rabbet, among others.

Korean contractor Samsung C&T signed a memorandum of understanding with Saudi Arabia’s sovereign wealth fund to build a factory making modular building elements in the kingdom. The two will jointly invest in the plant, which may be used in Saudi giga projects such as the Qiddiya resort planned for Riyadh and “The Line”, a futuristic 170 km-long city in Tabuk, in the northwest of the country, which is part of the projected $500bn Neom City.

Formwork and scaffolding specialist Peri has acquired German firm Implenia Schalungsbau, the formwork division of construction company Implenia. The company, based in Bobenheim-Roxheim, specialises in intelligent and complete services for formwork construction. According to Peri, the deal “perfectly matches” with its current product offering and will allow it to invest in both the infrastructure and high-rise segments, which it describes as “urgently needed capacities.”

The European Union Innovation Fund announced funding of EUR 328 million in two Holcim decarbonization projects at – the grants will accelerate the development of Holcim’s breakthrough carbon capture utilization and storage (CCUS) projects in Germany and Poland. These projects are part of Holcim’s net-zero roadmap, including over 50 CCUS projects worldwide.

Weakening demand for affordable housing has prompted Skanska to launch a turnaround plan for its modular homes arm BoKlok, which it runs in partnership with Ikea. Revenue in its residential development division fell to €68.5m in the final quarter of 2022, down from €318 million in the same period a year before. It has launched a turnaround programme and appointed Lars Jonson as new business unit president. Skanska said initial measures would focus on responding to tougher market conditions and operational stability. Link Overall, Skanska reported a marginal fall in operating earnings for the fourth quarter 2022, while backlog of orders in the key construction arm remained at historically high levels. Skanska has seen sharp slide in activity in residential and commercial property development in recent quarters as a soaring inflation and a string of hefty interest rate hikes has begun weighing heavily on households and businesses. Link

Eagle Materials’ consolidated sales were US$1.68 billion during the first nine months of its 2023 financial year, up by 16% year-on-year. In its cement business, the group noted a drop in volumes and a rise in prices year-on-year during the third quarter of the 2023 financial year.