Issue 302 | 18 October 2021 - Turner & Townsend alinea

Materials, stocks, and commodities

FTSE 100 | The UK index reached a post-pandemic high, encouraged by banking and oil stocks as oil prices pushed above $85/barrel.
Silicon squeeze | A shortage of silicon, caused by production cuts to reduce energy usage in China, has pushed prices up by over 300% in less than two months. Silicon is used in a variety of products such as computer chips, glass, and silicone materials.
Graphene | A floor slab in Manchester’s Mayfield regeneration scheme has made the first commercial use of concrete strengthened with graphene in a suspended floor slab. Tests show it should reduce the necessary concrete volume by 30% and reduce drying time from 28 days to 12 hours.
Cement plans | Forty of the world’s leading cement and concrete manufacturers are collaborating to speed up progress to greener concrete by pledging to cut CO2 emissions by a further 25% by 2030. The world’s most used human-made material accounts for 6 – 7% of total global CO2 emissions.
Factory gate prices in China grew at the fastest rate on record last month (an annual rate of 10.7%). As China is a key exporter concerns have been raised over the impact this could have in other economies.
Port jam | Felixstowe, which handles over a third of UK container traffic, has warned that the HGV shortage has caused a backlog of containers, causing freight to be rediverted to other ports. Last year we also reported on container jams at Felixstowe because of Covid-related delays.

Labour gaps | Construction vacancies soared to the highest levels since records began in 2001, according to ONS figures. The 43,000 vacancies equate to around 2.9 for every 100 jobs in the industry.
Output | The latest data from the ONS shows that overall construction output is 1.5% below pre-pandemic levels and private commercial work is still 26% smaller. Infrastructure saw a less positive month than usual, only growing 0.4% but is 45% larger than pre-pandemic levels.
Net zero London | All of London’s 33 boroughs have signed up to a plan to retrofit 3.8m homes across all tenures to an average EPC of B by 2030, investing £98bn. As part of the plan, the boroughs will work together to develop skills and procurement models that can build the right retrofitting capacity within the sector.
Commercial property lending has recovered to pre-pandemic levels but under-performing loans stayed at a high of 9.35% according to the latest UK Commercial Real Estate Lending report. Year-on-year transaction volumes have increased by 50% as the backlog from 2020 is cleared.

Global growth | The IMF cut its forecast for global growth this year, naming supply disruptions and the continuing pandemic as reasons. However, the overall move is only modest; from 6% to 5.9%, but the IMF stated that this average masks large downgrades for some countries. Growth expectations for the US have been downgraded by 1% and the Euro area has been upgraded by 0.4%.
Unstable recovery | China’s National Bureau of Statistics (NBS) confirmed Q3-Q3 growth as 4.9%. Economists had expected 5.2% and at the beginning of the year annual growth was running at 18.3%. Supply chain difficulties and energy shortages have impacted growth and an NBS spokesperson called the domestic recovery “unstable and uneven”.

Warehouse shortages | Problems moving goods due to a lack of HGV drivers is creating a lack of warehouse space which is being further compounded by a general warehouse staff shortage. Staff are reportedly being offered 30% pay rises to try and fill thousands of roles, and Amazon has offered a £3,000 bonus to try and fill 20,000 Christmas roles.
Foreign investment | The owners of Selfridges are in talks with a Qatari fund over the widely trailed £4bn sale of the department store.
Interest rates in the UK could move soon as the Governor of the Bank of England warned that the Bank will have to act over rising inflation. He also raised concerns over labour supply growth in an online panel of central bankers.