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Hey there, construction enthusiasts! Rina Meng here, ready to hammer out the details on how weak construction output is impacting the European aluminum and steel market. It’s like a construction site without a foreman—things just aren’t shaping up as planned. So, grab your hard hats and let’s dive into the challenges facing the industry!
The Outlook: Construction Blues
Picture this—I’m standing on a construction site, surrounded by cranes, scaffolding, and a whole lot of potential. But something’s not right. The European construction industry is facing some serious hurdles that are putting a dent in the aluminum and steel market. According to the European construction association FIEC, investment in construction across Europe is expected to fall by 2.5% compared to the previous year. Ouch! It’s like a wrecking ball to our hopes of growth.
The Hardest Hit and the Shining Star
Let’s talk about the impact on individual countries. Sweden, oh Sweden, you’re expected to take the biggest hit with a projected 13.7% decrease in construction investment. It’s like a construction site left in disarray, waiting for a revival. On the other hand, Portugal is the shining star, expected to experience a 3.4% growth in construction investment. It’s like a beacon of hope amidst the construction gloom.
But wait, there’s more. The construction sector is also feeling the pinch when it comes to employment. In 2022, the sector employed 11.1 million workers, but that number decreased by 4.0% compared to the previous year. It’s like a crew down on their luck, waiting for the next big project to come their way.
The Impact on Aluminum Market
Now, let’s shift our focus to the aluminum market. Weaker demand from the building and construction sector has taken its toll on the European aluminum billet market. Inquiries have dwindled, leading several producers to take extended summer maintenance breaks. It’s like a construction site with crickets chirping instead of hammers pounding.
According to market participants, physical demand for building and construction aluminum has dropped by around 30-45% in Europe this year. That’s a significant blow! It’s like a wrecking ball smashing through our hopes of a thriving aluminum market.
Premiums and Prices Take a Dive
The impact on prices and premiums is evident. The aluminum 6063 extrusion billet premium in North Germany (Ruhr region) has experienced a downward trend. On June 30, it was assessed at $525-565 per tonne, compared to $530-580 per tonne just two weeks earlier. It’s like a rollercoaster ride, with prices going down, down, down.
In fact, the premium has seen a staggering 61% decrease from the same time last year. Back then, premiums were soaring due to skyrocketing energy costs and supply concerns. It’s like a rollercoaster ride that took a sudden drop, leaving us all a bit dizzy.
So, what’s causing all these construction blues? Well, high inflation and interest rates are certainly not helping. Add to that the lack of government stimulus and support schemes, and you’ve got a recipe for stagnation. It’s like a construction project stuck in limbo, waiting for a sign of progress.
The Future: A Ray of Hope?
Overall, the road ahead for the European aluminum and steel market seems bumpy. The construction sector needs a boost, and it needs it soon. But hey, let’s not lose hope. Construction is a resilient industry, and it has overcome challenges before. It’s like a phoenix rising from the ashes, ready to rebuild and soar to new heights.
Thanks for joining me on this construction rollercoaster, my fellow builders. Together, let’s keep our hard hats on, our spirits high, and build a future that’s strong and sturdy!
Signing off with a catchy catchphrase that’s as solid as a foundation: Let’s hammer out the challenges and construct a brighter tomorrow!
Thanks for joining me on this construction adventure, folks. You’re the cement that holds my words together, the steel beams of inspiration!