November constructsteel newsletter

Construction lost as much as USD 40Bn on poor productivity in 2022 due to labor inefficiencies, and it appears to be getting worse. According to a survey from FMI Corp, nearly half of respondents (45%) saw declining labor productivity on their job sites in the last 12 to 18 months, compared to 23% who claimed improvements. The report describes labor as “the largest, riskiest, yet most controllable variable cost” in construction and these problems could worsen in coming months.

US Backlog declined to nine months in September even as contractor confidence remained high. The Associated Builders and Contractors’ Construction Backlog Indicator fell 0.2 months from August’s reading of 9.2 months and was unchanged year over year. Large contractors felt the dip the most. Those with revenue of more than USD100Mn lost 3.2 months compared to August’s backlog, falling from 13.8 to 10.6 months.

UK’s construction activity sank to its lowest level in September since the depths of the first national lockdown in spring 2020. The headline S&P Global / CIPS UK Construction Purchasing Managers’ Index (PMI) for September 2023 registered 45.0, down from 50.8 in August.
All three main segments of construction work posted a reduction in business activity in September, led by a steep and accelerated fall in house-building (scoring 38.1), followed by civil engineering activity (45.7).

Quarterly forecasts from the Construction Products Association (CPA) put construction output growth at minus 0.3% for 2024. The revisions are based on the determination that UK interest rates are now likely to have reached a peak that is lower than previous expectations, but it is now anticipated that they will remain at this level for longer, until 2025, due to stubborn inflation.
Consequently, the UK economy is expected to flatline throughout 2024, holding back the recovery in major sectors of construction activity such as new build housing and repair, maintenance, and improvement to 2025.

Saudi Arabia launched three new housing projects in the capital Riyadh comprising more than 1,400 units as part of an ongoing drive to expand citizens’ house ownership. The projects include “Sama Al-Forsan” and “Jawharat Al-Forsan” which comprise a total 1,063 units and are part the “Dahiyat Al-Forsan” district which includes the construction of nearly 50,000 houses accommodating over 250,000 people.

Thailand plans to speed up the construction of the China-Thailand railway, a bilateral flagship project under the China-proposed Belt and Road Initiative (BRI). Thailand will create a rail system from Bangkok to Khon Kaen, Nong Khai, and extends all the way to China, aligning with the Belt and Road Initiative. The two provincial capital cities of Khon Kaen and Nong Khai are both regarded as transport hubs leading up to Thailand’s northeastern region.

As per the Bureau of Labor Statistics Producer Price Index data, US Construction input prices increased 0.2% in September mainly due to rising energy costs. Overall construction input prices are 0.3% higher than a year ago, while nonresidential construction input prices are 0.6% higher. This follows a 1.5% materials price increase in August, the first in six months.

Progreso inaugurated Guatemala’s first-ever 3D printed building, through its corporate accelerator, Progreso X. The milestone was achieved in collaboration with Danish 3DCP Group, utilising COBOD International’s BOD2 construction 3D printer. The project has successfully taken steps to validate the structural viability of 3D construction printing in a seismic-prone region. The build, featuring 3m (9 feet) high 3D printed walls, was completed in just 26 printing hours, over seven days.

Cement consumption in Argentina fell by 7.8% YoY to 1,118,042t in September 2023. Argentina’s total demand was met by local producers and no imports were recorded. Domestic cement producers manufactured 1,122,500t of cement, down 7.8% YoY in September 2023. Of this total, they exported 4458t, representing a 10.5% decrease when compared with September 2022, when 4982t were exported.

A collaboration between the steel and cement industries to produce zero-emissions cement on an industrial scale has completed its first trial melt, in the UK. The Cement 2 Zero project is seeking to advance the decarbonisation of the construction, cement, and steel sectors by ensuring its cement production process can be scaled up from laboratory to pilot plant. Partner organisations include the Materials Processing Institute, University of Cambridge, Celsa Steel UK, Atkins, Balfour Beatty, Day Aggregates and Tarmac, with each taking on a role in research, development, scaling and testing.

Sales through Britain’s builders’ merchants continue to slow, with volumes down 10.5% on the year in August. There has been further modest easing in inflation in the prices of building materials and products, with builders’ merchants’ prices up 8.0% in August 2023 compared to August 2022. Month-on-month, total merchant receipts were down 1.9% in August compared to July while volume sales were down 3.2%; prices increased by 1.4%. With one additional trading day in August, like-for-like takings were 6.3% lower.

Dubai Municipality launched the world’s first system for certification in the field of 3D printing in the construction industry. The system, which includes conformity marks, will serve as a proactive measure to streamline procedures, and improve the quality of concrete mixes used in factories licensed and operating in Dubai. The move plays a pivotal role in advancing Dubai’s leading position as the world’s first city to adopt a conformity marking strategy for 3D printers used for construction and regulate this cutting-edge and sustainable construction technology.

India’s Council on Energy, Environment and Water (CEEW), has estimated that India’s cement and steel sectors will require capital expenditure investments of USD627Bn in order to reach net zero CO2 emissions. The council stated that waste heat recovery (WHR) and other efficiency-enhancing upgrades to cement plants can immediately reduce the industry’s emissions by 32%.

CEMEX reported 9% YoY growth in sales for the third quarter of 2023. EBITDA over the same period advanced by 32%, while the EBITDA margin expanded to 19.9%. For the first time since the launch of CEMEX’s pricing strategy in 2021, designed to regain profitability after a surge in input cost inflation, quarterly EBITDA margin exceeded its goal of recovering 2021 margins.
By region, net sales in Mexico increased 21% YoY in the 3Q23, to USD1361Mn. EBITDA grew 31% to USD399Mn. In the US, net sales were up 5% to USD1394Mn. EBITDA increased 36% to USD268Mn, with the EBITDA margin reaching 19.3%.

Galliford Try reported a strong operating performance after reporting increased revenue and profit for the year ended 30 June 2023. Galliford Try’s Revenue is up 12.6% to GBP1,394Mn (USD1690Mn), while pre-exceptional profit before tax (excluding contract settlement write off) rose by 22.5% to GBP23.4Mn (USD28Mn). Revenue growth benefited from a higher level of activity from the AMP7 program in the water sector and the first full year of trading following the acquisition of the water operations of NMCN out of administration. Link ; Three years after selling its house-building business to Bovis Homes to concentrate on construction contracting, Galliford is getting back into housing partnerships. The company has no intention to get back into speculative house-buildings but is looking to revive the old Galliford Try Partnerships offering that it sold to Bovis in January 2020. Its focus will be on the mid to high-rise market.

Hilti announced it successfully completed the acquisition of construction software company, 4PS group. The acquisition of 4PS, which specialises in providing business process management software for the construction industry, has allowed Hilti to drive the digital transformation of the construction industry.

France-based construction and concessions company Vinci Group has released its financial results for Q3 of 2023, reporting a 12% increase in turnover compared to last year. The revenue from Vinci’s Construction division totaled EUR23.4 billion, up 9% on an actual basis and up 8% like-for-like, compared with 2022. In construction, Vinci Group says that it is driven by rehabilitation projects and the construction of public buildings, particularly in the hospital sector.

Holcim reported net sales of CHF7340Mn (USD8147Mn) in the third quarter of 2023, down 8.8% in absolute figures but up 4.3% organically when compared with the 3Q22 when net sales reached CHF8045Mn (USD8908Mn). Holcim continues to invest for profitable growth and has made a total of 21 value accretive acquisitions this year. The latest acquisitions include a UK provider of construction demolition materials to advance circular construction across this key market, a ready-mix concrete acquisition in Australia to strengthen Holcim’s position in the Victoria market, and a roofing company in Germany to continue the expansion of advanced roofing systems in Europe.

Saint-Gobain Global, the French glassmaker, announced it would invest INR3,400 Crore (USD410Mn) in its various business verticals in Tamil Nadu. The company has committed to a series of greenfield and brownfield investments in the state toward its manufacturing and construction projects. This will take its total investment in the state to upwards of INR8,000 Crore (USD961Mn).

UltraTech Cement announced planned new capital expenditure investments worth USD1.56Bn to grow its production capacity, beginning in the 2026 financial year. The growth will expand UltraTech Cement’s capacity by 13% to 187Mt mainly in India.