Steel Markets

Will Construction be the Comeback Kid - The View From Platt's Steel Market North America Conference

March 23, 2014

SMU’s John Temples attended the Platts Steel Market’s North America Conference this week. Panelist focused on market forecast, natural gas, service center operations, and a healthy dose of business promotion. One discussion of interest was on the recovery and outlook of the construction sector.

Throughout the conference, many people were optimistic about the non-residential construction sector. According to one analyst speaking at the Platts steel North America Conference, it seems that end markets are poised to improve. The nonresidential construction market could experience a 6-8 percent growth rate.

The last voice of the conference challenged these projections. While many touted the comeback of non-residential construction as a potential leader in market recovery, John Cross, vice president of market development and finance at the American Institute of Steel Construction, disagreed. When posed with the question of “will construction be the comeback kid,” Cross answered with a confident and informed “No”.

While others were optimistic with non-residential construction growth of 6-8 percent, Cross reminded us that construction is still 48 percent below the 2006/2007 peak. While we can historically rely on the non-residential construction sector to lead the way in recovery, Cross felt we are currently coming from too low of a base.

What key factors must be strengthened to improve growth? According to Cross, employment levels must increase, and a GDP of greater than 3 percent must be sustained. Which construction sectors are likely to lead the way in the initial growth? Industrial and multi-story residential construction. Considering all of this, Cross feels that we will see an 11 percent increase over 2013 levels and perhaps a cycle peak by 2017/2018.