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Healthy, confident and in demand

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Tom Goldberg

BCSA President Tom Goldberg reviews the current steel construction market.

We have experienced a most unusual 2004 in the steel construction industry. I hope it will help our clients and our steelwork contractors if I review what has happened this year, and what is likely to happen in the future.

Right now, our UK steelwork contractors are experiencing high levels of demand – despite the significant cost increases in our basic material supplies over the last year.

Steel continues to be the UK’s (and the world’s) most popular construction medium. It is the modern, efficient, sustainable building material. It is constantly achieving new designs, new products and higher standards. It is safe, reliable and eco-friendly. Steel framed buildings only contain 33% more steel than an equivalent reinforced concrete building. While a typical steel framed building’s foundations and superstructure use around 65kg of all steel products per m² of gross floor area, a typical reinforced concrete frame and flat slab solution will use around 40kg/m² of rebar for the same elements. Concrete buildings are therefore also affected by material price increases in steel, in addition to the rising costs of cement, aggregates and shuttering.

In the UK structural steelwork remains the favoured framing material for about 95% of all single-storey buildings and 68% of all multi-storey construction. Steel is also now fast becoming the world’s first choice – it represents best value for money, it is a modern and efficient material, it is “green”, reliable, quality assured, fast and accurate to build with. In the UK steel continues to win new markets in schools, hospitals, residential buildings and car parks.

No surprise, then, that the developing countries of the 21st century are boosting world demand for steel. China, India, Russia and Brazil – and other fast-growing countries – all want the same modern environment as us… “state-of-the-architect” shopping malls, offices, port and airport facilities, distribution hubs, hi-tech parks, schools, hospitals, apartment blocks.

In 2004 worldwide demand for steel increased by 8%. Despite this surge, shortages in the UK have been avoided and there has been no supply problem. Steelwork contractors have worked hard to keep clients informed of increases and early involvement on projects by the steelwork specialists has paid even greater dividends than normal.

The price of raw steel materials has risen 60% in this past 12 months. The effect of this has been an increase of 20-30% in fabricated steelwork prices (dependent upon the type of structure). In turn, the effect upon total building cost will vary between 3% and 20%, with the greatest effect upon predominantly steel buildings like warehouses. However, increases in global raw material prices have also impacted on virtually all other building materials, including concrete and wood.

Where will steelwork prices go from here? Can’t say for certain, but the BCSA’s evaluation is that for 2005 we will operate in a much more stable environment. Prices for fabricated steelwork used in the construction industry are expected to increase in the range of some 5% for the whole of the forthcoming year. This is good news for our clients and the construction sector at large, as they will be able to more accurately forecast building costs. In real terms, steelwork prices are now still at the same level as 15 years ago.

Steelwork contractors’ order books are healthy  into 2005 and we do not anticipate any problems with supplies of steel or availability of fabrication capacity. BCSA members have enjoyed very robust conditions in 2004 and BCSA is optimistic that 2005 will continue to see the benefits of building in steel gain further in preference.

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