Weak construction output hampers European aluminum, steel markets

Slowing demand for construction materials continues to affect prices and premiums in European aluminum and steel markets
Aluminum steel base metal

European aluminum and steel market prices and premiums continue to decline, while high interest rates and rising material costs squeeze project investment across the continent.
"The outlook for 2023 is even more pessimistic, with European construction investment expected to fall by 2.5% year-on-year, with all sectors except civil engineering expected to contract," the European construction association FIEC said in its 2023 statistics report. Released June 27.
“Sweden is expected to be the worst affected country, with a projected decline in construction investment of 13.7%, while Portugal should be the best performer, with an expected growth of 3.4%. In terms of employment, the industry employs 11.1 million workers in 2022, a A decline of 4.0% in 2021," the FIEC report added.

Impact on the European aluminum market
Weak construction demand has weighed heavily on the European aluminum billet market in recent months, with some producers extending their summer maintenance break due to a lack of inquiries.
“I estimate that physical [construction] demand in Europe is down about 30-45% this year,” said an aluminum trader.
The premium for 6063 aluminum extruded billets in northern Germany (Ruhr area) was assessed at $525-565 per tonne on June 30, compared with $530-580 per tonne two weeks ago, the lowest midpoint since February 2021.
Premiums soared across the continent during the same period last year, down 61% from $1,350-$1,500 a tonne a year earlier, amid soaring energy costs and heightened supply concerns.
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