The increase in construction material costs – mainly steel, but also cement, glass, insulation, and others – put a break mainly on residential construction in Germany, says industry association Hauptverband der Deutschen Bauindustrie.
The industry’s order intake through October was 14% lower than in the first ten months of 2021, with residential construction suffering most, Kallanish learns from an update by Hauptverband this week. Projects have been postponed or suspended due to rising material costs. In the first 11 months, these were more than 16% above those of the corresponding prior-year period, according to the federal statistics office.
In December, the association stated that headwinds had not waned during the fourth quarter, and in fact became fiercer. It warned that its previous forecast of a 5% revenue drop year-on-year will have to be adjusted once more, adding it will give a figure in the course of January.
Compared with commercial and public projects, the steel used in residential construction is mostly rebar. Prices here actually came down considerably towards year-end, essentially matching those of late 2021, with a low-point base price of €550/tonne ($592), plus size extras of €265 translating to €815/t delivered.
However, even before Russia’s invasion of Ukraine sent prices skywards, that level was already considered expensive, after massively surging electricity costs since mid-2021 pushed up EAF mills’ steel prices.
One rebar distributor has already informed its customers that the radical price correction towards year-end is likely to be followed by gently rising prices over the following weeks, in view of continued high energy tariffs. Some mills had already lifted offer prices before Christmas by €20-30/t, encouraged by temporarily filled order books.
Christian Koehl Germany
