stahlmarkt 09 | 2019

Steel International 29
Focus on construction
Germany‘s long construction boom has reached its zenith
The German construction boom has lasted far into this year, but towards summer, first signs came that a slowdown
cannot be avoided forever.
In May, the latest statistics available by
industry association Hauptverband der Deutschen
Bauindustrie (»Hauptverband«) showed
that orders were still up year-on-year.
But the figures differed quite a bit depending
on the segment. While residential construction
remained strong, public construction
saw a dip in real terms. The dip apparently
kicked in in May, as the period from
January through May still saw orders up
6.2% in real terms. The order backlog in
June was 4.3 months.
Activity still remained at a high level. »Due
to the high order backlog, construction companies
are still well utilised,« Hauptverband’s
managing director Dieter Babiel said in September
at the release of the figures for the
first five months. But he cautioned that the
boom cannot defy the overall economy forever.
»The increasing insecurities due to trade
disputes and Brexit are toxic for the economy.
Companies will be putting their investments
on hold, and this will sooner or later
filter through to the construction industry,«
he said.
Earlier, on the basis of the first quarter,
Hauptverband was still all cheers. At a
mid-year press conference, the Berlin-based
association came up with an increase
of the already optimistic outlook it had
presented in January. »The year in construction
2019 will be better than anticipated
at its beginning. That’s why we lifted
our forecast for the nominal growth of
revenues from 6.0% to 8.5%,« its president,
Peter Hübner, said.
At the end of March, the construction
industry had the highest order backlog ever
measured, EUR 53 billion. Over the past ten
years, spending in German construction rose
2.5% on average each year, according to
Hauptverband’s chief economist Heinrich
Weitz. He also highlighted the growing share
of foreign construction workers filling the
demand for manpower.
Copyright: Sülzle Stahlpartner Nordhausen
These days, a large number of trainees are
Croatian and others refugees from places
like Syria.
What’s puzzling though is that in defiance
of strong construction activity, reinforcing
bar prices in Germany and the Benelux
have dropped quite a bit in the course of
the year. The base price temporarily reached,
or surpassed, EUR 280, but by the
end of the summer came down to EUR 250
or less in many places.
This development is slightly bizarre, given
a construction industry that has kept doing
well, and limited rebar supply due to seasonal
mill closures for summer maintenance.
»Normally, this used to bring the price up,«
one German buyer comments.
Many blame the steelmakers for bringing
down prices without urgency, for the sake
of gathering orders. But others see the crucial
point elsewhere along the chain. They
argue that construction firms are all caught
in a continuous rat race and that that overcapacity
at bending facilities may be a factor
behind the situation. »Distributors have built
up quite a lot of bending capacities, overproportionally
to the demand volume from
customers, and now we have an imbalance,«
one stockholder said. According to him,
the expansions have mainly occurred at big
chains, which over the past five years have
expanded bending capacity by 70%, he estimates.
Furthermore, he sees a gap between
urban and rural areas. »There are hotspots
where prices and volumes match well, like
Sülzle Stahlpartner’s
Nordhausen branch
Stuttgart or Hamburg, where demand is
keeping up,« he comments. And, of course,
distributors from the outer rims are trying to
snatch city jobs. »You have an advantage if
you are close to a metropolitan area,« the
manager adds.
Sülzle supplies rebar to
Salzgitter
Normally, flat steel makers and producers
of rebar have little common ground. But
currently a major project in Lower Saxony,
allegedly the biggest industrial investment
in the state of Lower Saxony, has Salzgitter’s
heavy plate unit Ilsenburger Grobblech
link up with Sülzle Stahlpartner, a
distributor chain for mainly rebar.
Sülzle Stahlpartner’s Nordhausen
branch is supplying around 8,000 tonnes
of reinforcing steel and 300 tonnes of
bored piles for the new heat treatment
plant of Ilsenburger Grobblech GmbH
(ILG). At EUR 150 million, it is the highest
investment Salzgitter has ever carried out
at Ilsenburg. Sülzle supplies this construction
project on behalf of contractor ARGE
Neubau Adjustage Ilsenburg.
The new heat treatment line includes
two roller hearth furnaces, a MultiFlex-Quench
with a water treatment system,
a straightening machine and a preservation
line. Commissioning is scheduled
for mid-2020; the annual capacity is
projected at 200,000 tons.
steel market 01.2019