Materials prices put brake on German construction

After a reasonably good first quarter, German construction activity in the wake of the Russian attack on Ukraine was dealt a blow, and could keep ailing in the months to come.

In April, industry orders were 11.7% below April 2021, and 16.4% lower than in March, industry association Hauptverband der Deutschen Bauindustrie reports. “Investors are suspending their projects, scared by the overall insecurity and the strong increase of materials prices,” comments Hauptverband manager Tim Oliver Müller. This is especially true for residential construction.

Materials prices in May reached another all-time high, rising 17.6% above values in May 2021. “These are increases last seen in 1970,” the association states. For steel alone, the increase was far larger, at as much as 94%. Construction companies cannot make offers because the original cost calculation might simply become invalid during the project. “We fear that many residential projects will be postponed, due to construction costs, and rising interests for loans,” Müller says.

A manager at a rebar distributor words it even sharper. “Private residential construction is nearly dead, because people cannot afford it,” he tells Kallanish. In reference to rebar mills and the exorbitant prices they achieved in recent months, he says “they finally see that they are biting the hands that feed them.”

By: Eurometal

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