If not now, when?

Economic Week In Review | Issue 293 | 16 August 2021

Materials and commodities

  • Aluminium | Returning demand, along with output challenges have pushed the price of aluminium to a near ten-year high. Droughts in China’s Yunnan province have challenged hydroelectric output, limiting steel output. Yunnan was expected to produce 50% of global output growth between 2020 and 2023.
  • Steel cuts | China’s steel centre will extend output cuts to March 2022 to ensure blue skies for the Winter Olympics. Air pollution in Tangshan should fall by more than 40% year-on-year in the games period, which will begin on 4th February. Tangshan accounts for nearly 8% of global output.
  • Iron ore | News of China’s steel output cut pushed iron ore prices to a four-month low. Contracts to be delivered in January 2022 fell 1.3% per tonne.

Property and construction news

  • Contract awards increased by £500m to £6.1bn in July according to Glenigan. £1.2bn of this was in the infrastructure sector with the Department for Transport and Network Rail accounting for £722m. £8.69bn of projects were approved by planning departments, a 26% increase on June’s figure.
  • Demolition diesel | The National Federation of Demolition Contractors has said that its members “will be expected to phase out the use of“ diesel and to switch to bio-fuels or other low carbon alternatives by December 2022.
  • Warehouses | John Lewis will open a 1m sqft warehouse with 500 staff in order to meet increasing online demand.
  • Build-to-rent | The BTR market saw a near 80% increase in investment in the first half of this year, according to Knight Frank, reaching a total of £2.35bn. 70% of funds committed were for schemes outside of London.
  • Efficiency standards | A report by Colliers says that 20m sq ft of office space in London currently falls short of energy efficiency standards that will be introduced in 2023. The new standards will require leased buildings to have an energy performance certificate of at least E, anything lower will be illegal to lease. F and G rated buildings currently make up 10% of the market, and D to G rated stock accounts for roughly 60% of buildings. The government is currently consulting on legislation limiting leases to A or B rated buildings in 2030.
  • Carbon concrete | The world’s first building made from concrete reinforced with carbon fibre rather than steel is under construction in Dresden, Germany. It is expected that the embodied carbon of the structure will be half that of a traditional steel reinforced structure, and will be four times stronger.

UK economic news

  • Semiconductor chip shortage | Demonstrative of how a shortage in one part of a market can upset an entire sector, sales of used cars have doubled to a Q2 record. The global chip shortage has constrained production lines and the shortage is expected to push into next year. New car sales had their weakest July since before 2000.
  • GDP | The UK economy grew 4.8% in Q2 2021, encouraged by the rolling back of Covid-restrictions. However, the economy still lags behind pre-pandemic levels and Pantheon Economics describes the UK as “the straggler” among advanced economies.
  • Irish trade | Freight between Ireland and Britain has fallen 29% since the new Brexit rules came into effect in January as Irish exporters have chosen to bypass the UK.

Global construction

  • Port congestion | According to logistics company Kuehne+Nagel, there are 353 container ships stuck outside of ports around the world, double the number earlier in the year.
  • US infrastructure | The $1tn infrastructure bill gained Senate approval and now needs to be passed by the House of Representatives. The Bill promises bill to replace lead pipes, deliver affordable, high-speed Internet to every American, upgrades to the power and water systems, strengthening levees and a national network of electric vehicle charging stations
  • US inflation | The pace of increase in consumer price inflation eased in June, but still rose 0.5% to 5.4%, the largest annual increase since July 2008.
Tender Price Index

Published every six months, our Tender Price Index is an analysis of inflation price deviation in construction prices. Click on the link above to view our most recent Index.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 7,218.71 1.34 18.53
FTSE 250 23,788.45 1.42 34.13
Nikkei 27,977.15 0.56 20.13
CSI 300 4,945.98 0.50 5.13
S&P 500 4,468.00 0.71 32.47
Nasdaq 14,822.90 -0.09 34.52
CAC 40 6,896.04 1.16 38.95
Dax 15,977.44 1.37 23.84
$ per £ 1.3856 -0.11 5.72
€ per £ 1.1746 -0.42 6.04
Gold £/oz 1,282.95 0.92 -13.69
Brent Oil $/barrel 70.59 -0.16 57.57

Weekly Summary

In light of last week’s IPCC report, and the industry’s growing commitment to Net Zero Carbon, the report from Colliers is a useful reminder that we cannot ignore our existing building stock. Retrofitting these buildings and reinventing them into a more energy-efficient state will be crucial to successful sustainability goals.

Whatever the current term is – environmentally friendly, sustainability, ESG, carbon aspirations – we in the construction industry have a duty to ensure that the buildings we create and promote are fit for purpose beyond today.

The week’s news also shows that shocks to the global supply networks have not been resolved. Whilst some of these disruptions such as blue sky policies in China or droughts are not uncommon, they will affect an already upset supply chain, reliant on just-in-time deliveries, with bottom lines that have been tested recently.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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