Market improvement confirmed

Strong signs of a rebound in the market for steel construction and the construction sector more generally have come from the BCSA forecasting strong demand growth in 2015 and beyond, the National Specialist Contractors Council (NSCC) reporting an eight year high in the number of members increasing tender prices, and Tata Steel Europe reporting improvement in the first nine months of financial year 2014-2015.

BCSA reports that consumption of structural steelwork in the UK is expected to increase 9% to 895,000 tonnes in 2015, according to research by Construction Markets.

The demand increase will come after a 6% rise in 2014, and structural steel consumption is estimated to reach 972,000 tonnes in 2018 (the end of the forecast period).

BCSA Director General Sarah McCann-Bartlett says UK structural steelwork contractors have sufficient capacity to meet all of this demand. Price increases are now evident, she says but steel is holding its own as the most cost competitive framing material.

In 2015, the strongest volume growth will be seen in the in key industrial sector (+12%), offices (+10%), education (+8%) and power (+12%). Ms McCann-Bartlett said: “The future for the UK’s structural steelwork sector is bright, and the inherent advantages of steel like speed of construction, offsite manufacturing, and cost mean that steel will continue to be the framing material of choice.”

The brighter outlook for industry demand is confirmed in the NSCC’s state of trade survey for the last quarter of 2014 which shows 44% of specialist contractors increasing tender prices compared to 11% who decreased prices.

The balance of tender prices – the difference between those reporting an increase and those reporting a decrease – is the highest since late 2006.

Factors behind the rises are said to be increased demand and the rising cost of materials. NSCC said 82% of specialist contractors reported rises in suppliers’ prices in the last quarter.

Almost half of specialist contractors say they are working at over 90% of capacity and 80% report working at above 75% capacity. Capacity levels look set to be maintained over the next year with more than half of respondents anticipating that their workload will increase during this period.

Tata Steel Europe has announced an operating profit of £74.7 million for the first nine months of 2014-15, compared to £13.9 million for the same period in 2013-14.

Turnover in the first nine months also increased to £6.14 billion and deliveries were up from 9.79 million tonnes to 9.86 million tonnes.

Tata Steel Europe Chief Executive Officer Karl Koehler said: “The improvement in our financial performance has been gathering strength. A significant contributor to this has been the transformation of our product mix towards advanced steel products that give our customers a competitive edge.

“We see opportunities to further improve our performance this quarter and we will continue to enhance our portfolio to strengthen our position in Europe.”