The Global Construction Sector is in Dire Straits As War Repercussions Cut Short Demand
- 29-Jul-2022 2:35 PM
- Journalist: Jacob Kutchner
Since the beginning of the Ukrainian war, several key industries have not rebounded or gained stability, and the construction sector is one of them. Q2 and Q3, traditionally termed peak demand seasons, have been underwhelming as consumption rates remain snug. As per the recent assessment, the global construction industry has been bearing the heat of pandemic and war-induced uncertainties, which has eventually affected its growth and slowed its activities.
The analysis shows that the demand for multiple construction raw materials has lost its shine, owing to different market disturbances that have been ruining the global economic activities. According to the data, prices of construction-related raw materials, including Sodium Lignosulphonate, Potassium Silicate, Zirconium Silicate, etc., have declined in China during July 2022. Meanwhile, Germany has showcased entirely different pricing dynamics, despite a common denominator, i.e., wavering demand.
The construction sector of China, which used to be the backbone of the country's economy, has weakened, and there are many factors that have been affecting the industry and resisting its growth. One of the major factors is inadequate cash flow in the market, due to which manufacturers are struggling to sustain their production and looming the possibility of long-term incompletion of already pending real estate projects, along with ample availability of inventories in the market.
On the other side, Germany has been battling the energy crisis, which has already slowed down the country's growth. According to market intel, German producers are opting for production cuts due to insufficient availability of Natural gas; as the "Winter is Coming," the country must ensure ample inventories to tackle the cold. Furthermore, under these circumstances, demand for construction-related raw materials has shrunken from the market. However, prices are still hovering at a high value for some chemicals like Potassium Silicate, driven by prolonged high input costs.
Nevertheless, other European economies are not witnessing similar market fundamentals, as their need and procurement strategies differ from Germany. High reliance on Russia for Natural gas imports is the prime factor behind the current situation in Germany, which will take a significant time to vanish.
As per the ChemAnalyst analysis, the global construction sector will take time to rebound, as the current market uncertainties are not showing any sign of disappearing soon. Furthermore, due to their domestic instabilities, the threatening recession has already become a primary concern for China and Germany.