Advertisement

If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.

ENJOY UNLIMITED ACCES TO C&EN

Business

Construction: U.S. continues on the rebound, as Europe lags and Asia slows

by Marc S. Reisch
January 13, 2014 | A version of this story appeared in Volume 92, Issue 2

 

Home, commercial, and civil construction will rebound globally this year, particularly in the U.S., where the housing market is on the upswing. Construction in Europe will once again be slow, but economists say the recession is over and the situation won’t be as dire as last year. Meanwhile, developing countries will post strong growth but perhaps not at the double-digit rates enjoyed in the past.

A revived housing market was a major reason behind the 3.2% surge in U.S. chemical production last year excluding pharmaceuticals, according to the American Chemistry Council, a leading trade association. U.S. construction activity rose 3.5% in 2013, the group says, and it predicts a further 7.4% rise in 2014.

“The U.S. housing market is moving along very well,” says Phil Phillips, president of paint industry advisory firm Chemark Consulting. Helping builders turn a profit are lower prices for lumber and other raw materials. Meanwhile, mortgage rates below 5% are making it easier for consumers to take on loans, he says.

The result is a rise in new home construction. According to the National Association of Homebuilders (NAHB), single- and multi-family housing starts will jump nearly 25% in 2014, after an 18% increase in 2013.

It’s not just new housing that will boost demand for paints and coatings this year, says Eric Kaiser, Americas director for Arkema’s coatings resins business. “Painting is a common upgrade prior to selling an existing home,” he notes. Existing single-family home sales rose more than 9% last year and should increase by about the same amount in 2014, NAHB reports.

In Europe, the construction industry will continue to scrape along the bottom, says Henry Warren, senior principal analyst at IHS Chemical. European production of polyvinyl chloride, a plastic widely used in residential and infrastructure construction, is down by 20–25% from its prerecession peak.

With Europe’s governments continuing to keep a tight rein on spending, Warren doesn’t expect more than a 1% recovery for the PVC business in 2014. “We’re at bottom now,” he says, and even such a small recovery will be a positive sign.

Russia, however, will boom, Phillips says, as the oil and gas industry builds infrastructure to move fuel southwest to Western Europe. One of those projects is a 1,490-mile pipeline that will cross the Black Sea and head toward Italy.

Construction will continue to increase in China, Phillips adds, but it will likely grow more slowly than in the past as the government applies the brakes on a fast-moving economy.

Article:

This article has been sent to the following recipient:

0 /1 FREE ARTICLES LEFT THIS MONTH Remaining
Chemistry matters. Join us to get the news you need.