The highest prices of construction materials ever

Illustration (Photo: Pixabay.com)

Based on research in the new issue of the journal Macroeconomic Analysis and Trends, MAT, transmitted by N1, metal prices on the international commodity market are at an all-time high. The analysis points out that a significant increase in the prices of domestic producers leads to an increase in prices in the construction sector pig iron, steel, ferroalloys and other in the field of production of basic metals.

As they hope to accelerate global economic growth and recover industrial and construction activity in the international market, this affects the growth of metal prices. Due to the global pandemic, there are occasional interruptions in the work of mining companies, but also to unnecessary storage due to unrealistic expectations towards accelerating the transition to the green economy and infrastructure programs.

Due to the easing of restrictive measures, the states, as a way out of the crisis, directed significant financial resources to capital projects and infrastructure development, so that the demand exceeded the supply.

According to Ivan Nikolić, editor of MAT magazine, many people set aside money for vacations now investing in the adaptation of living space, so that higher prices of construction materials occur, which is also transferred to cost pressures in industrial production.

The biggest problems with the procurement of raw materials and intermediate goods were in the production of plastics, so that this summer there was no polyethylene and polypropylene necessary for the production of plastics almost anywhere. It is too crude oil also became more expensive on the world market, and large petrochemical capacities in America and China have stalled. For these reasons they are prices of plastic plate, sheet, pipe and profile manufacturers rose the most, by as much as 33 percent in April, and is currently 40 percent higher than the previous year.

Euro bitumen is one of the most important materials in the construction of roads which is a product of the processing of petroleum products, so that its price is formed according to the movement of the price of oil and petroleum products on the Swedish market, so its price rose 4.6 percent.

According to the analysis, the growth of construction materials reached its maximum in the middle of this year, and prices are expected to stabilize. The risks exist due to the state program for subsidizing the replacement of carpentry, heating boilers and insulation, if the demand of citizens for these products would be higher than domestic production capacities, but since the program is implemented in the medium and not short term, the risks are small.

China’s decision to reduce the production of crude steel by using outdated capacities, in order to reduce emissions, in the long run affects the growth of the price of iron, steel and ferroalloys, which will most likely grow after 2021. The reduction of supply on the European steel market may also be influenced by the introduction of temporary anti-dumping duties by the European Commission on cold-rolled stainless steel products originating in India and Indonesia.

Demand and price of copper will also grow in the future, mostly due to investments in digitalization and green technology. China and the EU have established recovery plans that support 5G telecommunications networks, large data set analysis and artificial intelligence. Besides, The EU is committed to recovery through the region ‘s transition to carbon neutrality by 2050. supporting the massive expansion of electric vehicles and supporting infrastructure. Copper as a good conductor of electricity and heat is crucial in the production of electrical equipment, industrial machinery and construction, and due to its antimicrobial properties, there is a demand in the health sector driven by a pandemic. The price of this material has increased by 90 percent in the last year.

During June 2020, China recorded the largest monthly import of copper ever. Some of the reasons for this are that solar panels and wind turbines require 12 times more copper than previous generation electricity producers, while electric cars use four times more copper than those used in internal combustion engines.


Source: Gradjevinarstvo.rs – VESTI by www.gradjevinarstvo.rs.

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