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Sales in real estate are going down and so is the pace of rebar consumption in construction

According to the State Statistics Service, housing construction volumes in Ukraine grew by 2% in the first ten months of 2019 compared to the same period a year earlier.

The first three quarters of 2019 showed insignificant increase in residential construction too.

At the same time, according to GMK Center’s research, the cost of construction works grew by 3.5% in that period. That means that the developers failed to ensure sufficient demand for long steel products.

“The number of construction projects has not decreased since the beginning of 2019. However, sales are falling because of the saturation of the residential property market, which results in construction delays. As a result, consumption of rebar, used in construction, remained flat, but the pace of its consumption slowed down. As rebar is the most material- and capital-intensive component in the structure of construction primary cost, developers slowed down its consumption,” comments Vyacheslav Bevza, Technical Director at NOVBUD development company.

Importantly, housing construction is the largest consumer of steel rebar. In its turn, in 2018, rebar accounted for approximately a quarter of the domestic market of metal products — 926 thousand tons.

Also, according to the State Statistics Service, in the first ten months of 2019, Ukraine produced construction products worth ₴131.5 billion, up 20.8% from January–October 2018. Commercial construction is the main driver of this industry’s growth in 2019.