French construction outlook deteriorates

Sentiment among French construction companies deteriorated in April following a negative March. The firms surveyed by l’Institut National de la Statistique et des Études Économiques (Insee) reported a stable but negative business climate.

Construction companies active in both structural works and finishings had a pessimistic attitude towards their future but also their past activity, as “the business climate in building construction has darkened”, an Insee report obtained by Kallanish states.

Last month, construction companies’ order books deteriorated again, falling back below the long-term average. Given their staff size, the firms surveyed reported eight months of work. Production capacity was stable on-month, while 44% of firms reported slowing output because of supply difficulties.

Slightly more business managers than in the previous month were facing obstacles which limited their production capacity. About 19% of construction firms considered themselves unable to increase their production in case of additional orders due to a lack of personnel and supply difficulties. About 33% of companies reported “insufficient” demand, Insee concludes.

The situation for steel consumption downstream is “completely catastrophic [in France], as it is in Germany. We see a challenging year ahead. The main concern today revolves around tight margins. In 2024, we will not manage to make a profit,” a French purchasing group source tells Kallanish.

Some long steel mills are asking on average for €20/tonne ($21) on-month increases but have so far not been successful in obtaining higher prices, except for very low tonnages. Contract values for long products remain mostly stable compared to April.

Volumes shipped from distributors in March were reported to be low compared to the same period last year, while April volumes slightly improved. May is considered “quiet” amid back-to-back sales. The distribution sector is said to have purchased between 20-25% less in the first quarter compared to last year and a similar trend is likely in Q2 (see Kallanish 17 May).

Natalia Capra France