Linesight has released its latest commodity reports, covering the trends and outlook for construction materials pricing and supply for 24 countries around the world across Q3 2022, including Australia, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, India, Ireland, Israel, Italy, Japan, the Netherlands, Norway, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, the UAE, the UK and the US. These reports are comprised of data collected from an extensive program of both primary and secondary research, coupled with key macroeconomic and construction indicators to provide an overview of the market landscape.

To read the press releases for some of our country-specific reports, please click the country in question below:

Ireland  

Singapore  

UK  

US  

Germany (in German)  

The reports can be accessed in the 'Latest Insight Articles' section of our 'Insights' page, or you can download the global report here.  

Ireland:

Construction material prices are stabilising, with demand levelling off in non-mission critical sectors and a more competitive supply chain 

Downside risks remain – higher energy costs and deferred projects due to the impacts of tightening monetary policy 

DUBLIN, NOVEMBER 2nd, 2022 - Linesight’s latest Quarterly Commodity Report highlights a stabilisation of construction material inflation, reduced volatility and a move away from the hyperinflation of commodity prices we have witnessed over the past 18 months. 

However, the perfect storm of circumstances, including soaring inflation and interest rates, is causing funding challenges, resulting in a levelling off in demand for some sectors, although this is not yet impacting mission-critical verticals, such as life sciences and data centres. 

Some of the key material movements of note include: 

• Steel prices had come under significant upwards pressure at the beginning of the year, owing primarily to surging production costs and disruption to trade. A reduction in global and domestic demand is now driving price correction back towards 2021 levels 
• Concrete prices remain elevated, impacted by high transportation costs and are expected to see an increase of 2.5% between Q3 and Q4 of this year. Looking to next year, the introduction of the concrete levy in the second half of 2023 will, of course, put further upward pressure on prices. 
• Although copper prices increased in July 2022, an easing in global prices will result in an anticipated drop of 2% in Q4. 
• Lumber demand has softened in recent months, although prices remain higher than 2021. The looming concrete levy may influence future building designs, potentially increasing demand for timber frame structures into 2023. 

The energy crisis continues to be one of the most significant factors keeping commodity pricing elevated. This is not likely to be remedied anytime soon, between the ongoing Russia-Ukraine crisis impacting Russian oil imports significantly, coupled with OPEC+’s recent decision to cut oil production by two million barrels per day starting in November. 

Forward-looking indicators suggest that growth will continue to slow into the last quarter of the year, reflecting heightened uncertainty and a tightening of financial conditions. This will mostly impact the viability of non-mission critical developments 

Stephen Ashe, Senior Director, Linesight said:

“A market correction may be on the horizon, as we witness some material costs begin to fall. While Ireland is performing better than many EU countries, increasing energy costs and interest rates continue to be a major concern and are likely to impact the viability of some projects.  Contractors are focused on filling order books into next year, taking actions such as cutting margins and looking at measures to maintain cashflow. We are working closely with clients to mitigate further supply chain disruptions and adopt stringent project controls including a robust risk analysis for projects.” 

To download the Q3 2022 report, please click here.

END

Media contact

Niamh Moore – Head of Marketing - Europe, Linesight

E: niamh.moore@linesight.com 

T: +353 (0) 87 0526215 

Singapore:

Conservative outlook for Singapore’s construction industry despite commodity prices stabilising  

With ongoing inflation and supply chain challenges, a measured approach towards resuming pre-pandemic workflows is crucial 

SINGAPORE, NOVEMBER 2nd 2022 – Global construction consultancy firm, Linesight, has released new data revealing some commodity prices for the third quarter of 2022 have stabilised as compared to the first half of the year. Although prices remain elevated as inflation, supply chain delays and labour market constraints prove to be the key challenges prices that are stable are expected to remain so for the coming months and into 2023, with some trending downwards. Amidst a slowing economy and higher interest rates, growth in Singapore’s construction industry will be buoyed by large strategic projects that have resumed since the easing of pandemic restrictions. The findings are part of Linesight's Q3 2022 Singapore Commodity Report.

Key construction materials in Singapore have stabilised from the peaks of the first two quarters of this year when geopolitical risk spiked amid the outbreak of the Russia-Ukraine conflict. Prices of steel rebar and flat steel are projected to decrease by 4.5% and 3% respectively from Q3 to Q4 2022, and this trend is expected to continue as iron ore prices drop across Asia. Meanwhile, concrete prices are expected to remain high and increase by 0.7%, as the outlook for raw materials and elevated transportation costs persist.  

While there is a gloomy outlook for global economic activity, coupled with the slowing down of China’s economy, demand stemming from investments in renewable energy is expected to contribute to keeping copper prices relatively high. Linesight predicts copper prices to increase by 1% from Q3 to Q4 2022, although they have dropped back from the mid-2022 highs.  

From a macro standpoint, construction output in Singapore, in sectors such as residential and institutional, have expanded considerably, with a 4.3% and 3.9% change from 2021 to 2022. However, the lead times of long-lead equipment (LLE) have extended drastically since the start of 2022 as a result of material shortages, delays and price hikes throughout the supply chain, which is leading to reduced commitment from suppliers for new projects. 

Michael Murphy, Director at Linesight Singapore, said:

“It is encouraging for construction players to see material prices stabilising, with some materials heading towards a relative downward trend. Linesight is working closely with its clients to ensure that they are able to navigate the complexities of the current market and capitalise the growth opportunities ahead as Singapore moves towards recovery of the construction industry.” 

To download the Q3 2022 report, please click here.  

ENDS

Media contact

Ruby Tyler/Eugina Sim - Klareco Communications 

E: linesight@klarecocomms.com

T: +65 6333 3449  

UK:

Construction commodity prices stabilising but inflation and high energy costs causing reduction in demand 

LONDON, NOVEMBER 2nd 2022 - Global construction consultancy firm, Linesight, today released new data forecasting stabilisation of key commodity costs, albeit at inflated levels. However, the perfect storm of circumstances, including rising energy prices, soaring inflation and interest rates, is causing funding challenges and constrained capacity. This is resulting in a levelling off of demand in some sectors, particularly non-mission- critical sectors. Project viability will become a challenge in some cases, as these trends are compounded by the upheaval being in financial markets.

This comes as recession looms, when consumer price inflation is running at 10.1%, the highest figure since 1982, and base interest rates at 2.25%, which is the highest such rates have been since the end of 2008.

Encouragingly, construction output rose in August by 0.4%, according to the Office for National Statistics, the eighth month of consecutive growth in 2022, reflecting the industry’s recovery from the effects of the pandemic. Mission- critical sectors such as life sciences and data centres are performing well, albeit facing particular challenges given current market dynamics – power availability, labour availability and costs, and supply chain bottlenecks, particularly with regards to long-lead, specialist equipment.

Linesight UK’s managing director Michael Riordan said:

“Key to our clients delivering their projects to markets on time and within budget is appreciating the market dynamics at play at any given time. Given the complexity of the current market environment and economic uncertainty, we are collaborating closely with them and advising of the importance of relationship-based supply chain management, as well as an elevated level of value engineering, in order to continue to deliver cost and programme certainty.”

Key findings of Linesight’s latest quarterly commodity report, published this week, include:

• Lumber prices have eased back from the highs of mid-2022, although rising production and transportation costs will keep prices elevated despite weakening demand, with increases of approximately 1% to end of year
• Steel prices remain under considerable pressure as a result of rising energy prices, despite a decrease in Q3. Prices are likely to stay contained with reduced demand, and likely to fall by 1% in Q4.
• Brick prices have been driven up sharply in recent months by rising production costs. Although demand will be somewhat weaker in the coming quarters, elevated production costs will mean prices stay close to current highs, with an increase between Q3 and Q4 of 1.5% expected
• Copper prices were fairly stable in August-September, but with a looming economic recession, these will likely dip by 1.5% between Q3 and Q4, although supply disruptions, particularly from Latin America, could generate renewed volatility
• Concrete prices have held up throughout most of 2022, and high energy costs will continue to be a factor in keeping prices high with an anticipated increase of 1% to year end.

Riordan added:

“The UK construction industry will be looking to the new Prime Minister, Rishi Sunak, to bring about stability – both economic and political. As we said three months ago, the industry urgently needs guidance on the government’s investment strategy if it is to plan effectively, and deliver the built environment the country needs and demands.”

To download the Q3 2022 report, please click here.

ENDS

Media contact

Roxane McMeeken – Director, ING Media

E: roxane.mcmeeken@ing-media.com 

T: + 44 (0) 20 7247 8334

M: +44 (0) 785 051 7994 

US:

Linesight reports that price stability for commodities will continue into 2023, helping US construction costs level off 

After a couple of years of sharp increases, commodity costs are normalising as global supply chains improve, but question marks about the American economy remain 

NEW YORK, November 2nd, 2022 — Global construction consultancy firm, Linesight, today released new data showing that the cost of commodities that are key for the construction industry has stabilised or slightly decreased, and is expected to remain lower for at least the first half of 2023. The company’s Q3 Commodity Report also indicates that there is cause for optimism about the US construction industry, despite uncertainty regarding the health of the US economy. 

Patrick Ryan, Executive Vice President for the Americas at Linesight, says that:

“Although issues and risks still remain when it comes to acquiring and shipping key commodities, global supply chains are improving. The availability of materials remains a challenge and may take longer to see a levelling off. Additionally, there are still challenges with producing and shipping long-lead equipment. Economic issues remain a concern, and the construction industry is still at risk. Nevertheless, the medium to long-term outlook appears to be positive, with growth expected in the coming years as inflation comes under control. Overall, we at Linesight envisage stabilisation and reduced volatility prevailing.” 

Among the key findings in the report are: 

• After a prolonged period of volatility, lumber prices have been on a downward trend since the end of Q1 2022. Supply-side fragilities have also eased: lumber mills in British Columbia have gradually rebuilt stock after flooding earlier this year and US tariffs on Canadian lumber have more than halved to 8.59 percent, putting further downward pressure on prices. 
• Steel prices have flattened over the past quarter and weakening demand points to a fall in prices. However, high energy prices continue to drive up production costs, and over the medium to long term demand will be sustained by infrastructure spending in the US. 
• After the sharp fall in prices in early summer this year, copper has stabilised. Copper prices have faced contrasting market dynamics. Supply disruption from protests in Chile and Peru, and a lack of investment in new mining operations have contributed to production shortfalls. Investment in EVs, along with renewable energy production and infrastructure, will put upward pressure on prices. 
• Cement and concrete prices have continued to edge upwards in recent months, primarily reflecting higher production costs (which were up by around 14 percent year-on-year in Q3 2022). With production and transportation costs unlikely to ease markedly, cement and concrete prices will remain close to current highs. 
• Early indications suggest some stabilisation in shipping durations is returning to the market, but the associated costs remain volatile due to the global fuel crisis. 

Ryan says that the most important issue right now is mixed data on the US economy:

“In spite of two consecutive quarterly declines, there are positive indicators being recorded to suggest economic resiliency in some key areas. For example, we are seeing the lowest unemployment rate in five decades, and the Federal Reserve has taken a particularly aggressive stance in combatting inflation. Uncertainty about what a recovery will look like is going to have a significant impact on the health of the construction industry in the months and years ahead.” 

To download the Q3 2022 report, please click here.

ENDS

Media contact

Cameron Thomas - VerbFactory  

E: cameron@verbfactory.com  

T: 416 660 9801   

Germany:

Die Rohstoffpreise im Baugewerbe stabilisieren sich, doch hohe Energiekosten, Inflation und Fachkräftemangel treiben die Prognosen für den Bausektor in den Keller  

FRANKFURT AM MAIN, NOVEMBER 2nd 2022 – Aus dem von Linesight vorgelegten aktuellen Rohstoff-Quartalsbericht geht hervor, dass der deutsche Bausektor zu jenen Branchen zählt, die insbesondere im Hinblick auf die Energiekosten am stärksten vom anhaltenden Krieg in der Ukraine betroffen sind. Arbeitskräftemangel und hohe Material- und Lohnkosten sind ein weiterer wichtiger Grund für die nach unten korrigierten Prognosen für das Wachstum im Bausektor um 1,6% für das Jahr 2022 und lediglich 0,7% im Jahr 2023.

• Stahlpreise bleiben volatil, wobei die höheren Energiekosten und weiterhin bestehenden Einfuhrbeschränkungen auf Importe aus Russland zu den anhaltend hohen Preisen beitragen. Bis zum Jahresende dürften die Preise um weniger als 1 % sinken.
• Die Kupferpreise sind nach einem Rekordniveau im 2. Quartal in den vergangenen Monaten wieder gefallen. Während die Nachfrage im Baugewerbe unter Umständen nachlassen wird, bleiben die Kupferpreise aufgrund des steigenden Bedarfs in der Herstellung von Elektrofahrzeugen und im Bereich der erneuerbaren Energien weiterhin hoch. Im 4. Quartal dürfte sich ein Preisrückgang um 1 % einstellen.
• Die Kosten für Beton- und Mauersteine sind aufgrund der anhaltenden Nachfrage und gestiegenen Herstellungskosten auf einem hohen Niveau geblieben. Bei nachlassender Nachfrage dürften die gestiegenen Herstellungskosten eine signifikante Preiswende verhindern. Außerdem ist von einem sinkenden Angebot auszugehen, da das Produktionsvolumen infolge der hohen Energiekosten voraussichtlich schrumpfen wird. Die Kosten werden im 4. Quartal voraussichtlich weiterhin um 1 % steigen.
• Die Nachfrage nach Bauholz wurde durch den Ukraine-Krieg in besonderem Maße beeinträchtigt, da Deutschland traditionell bis zu 14 % Weichholz aus Russland importierte. Der Preis hat infolge der hohen Produktions- und Transportkosten erneut stark angezogen. Er dürfte bis zum Jahresende um 1 % steigen, jedoch infolge der gesunkenen Nachfrage im Jahr 2023 wieder fallen.

Der Anhebung der Zinssätze hat ebenfalls einen signifikanten Einfluss auf die Durchführbarkeit von Projekten. Dies gilt insbesondere für nicht-systemrelevante Branchen. Angesichts der Tatsache, dass sich Investoren bei Projekten und den entsprechenden Sektoren derzeit eher zurückhaltend zeigen, überrascht es nicht, dass die Erwartungen der Branche für den Rest des Jahres 2022 und die ersten Monate des Jahres 2023 gedämpft sind.

John Atkins, Linesight Director und Länderverantwortlicher für Deutschland, erklärt:

“Steigende Energiekosten stellen nach wie vor ein großes Problem dar, sowohl bei der Materialproduktion als auch beim Transport. Angesichts der derzeitigen Lage raten wir unseren Kunden zu einem soliden Risikomanagement und einer strategischen Beschaffungspolitik, insbesondere bei Equipment mit einer langen Vorlaufzeit. Wir verfolgen einen datengestützten Ansatz und arbeiten auf dieser Grundlage eng mit unseren Kunden zusammen, um eine weitere Beeinträchtigung der Lieferketten zu vermeiden, ein noch besseres Value Engineering zu bieten und eine rigide Projektsteuerung mit verbesserter Risikoanalyse für künftige Projekte sicherzustellen.”

Der Quartalsbericht für das 3. Quartal 2022 steht [hier] zum Download zur Verfügung. Den Quartalsbericht für das 4. Quartal 2022 wird Linesight Ende Januar 2023 veröffentlichen. 

ENDE

Presse- und Medienkontakt

John Atkins, Director at Linesight 

E: john.atkins@linesight.com 

T: +49-176-61816923