By the end of this year, metal prices and logistics costs have dropped significantly, which should help the demand
Russia’s military aggression against Ukraine has had a significant impact on the entire economy and the construction industry in particular. However, after a few months of war, some of the customers have already returned to the construction of commercial objects that were frozen at the beginning of the full-scale war or damaged as a result of the hostilities.
Current situation
Rauta is a leading supplier of modern solutions for quickly erected buildings – sandwich panels, ventilated metal facades, steel frames, load-bearing profiles, etc. The company offers services in design, installation of supporting and enclosing structures, as well as general contracting on objects of any complexity. The main focus of the company’s business is the import of Ruukki products for commercial construction projects. We use production facilities located in Poland, Estonia and Ukraine.
After the beginning of the active war phase due to a significant decrease in demand for our products the company’s business was significantly reoriented. We began to be approached by clients with requests to rebuild buildings destroyed in the fighting. Having a deep understanding of the technologies and principles of reconstruction, we began to actively engage in the restoration of buildings and made it a separate line of business. Whereas before February 24 the company was restoring only one building in Kiev, by the end of 2022 we had implemented 7 projects in three cities of Ukraine, and the start of reconstruction of several more is planned for 2023.
Growth against the backdrop of a falling market
In 2021 there was a situation on the market when the demand for Ruukki products greatly exceeded the capacity of production and the factories were not able to fulfill all orders. Starting from 24 February, the number of orders for new construction projects decreased sharply, and the main deliveries were for objects that began construction last year. Fortunately, almost all of our sandwich panel customers continued to build facilities. Among them are low-temperature warehouse and business center in Kiev, dairy farm and dairy plant in Ternopil region. Therefore, in 2022 Rauta has a 40% year-on-year decrease in sales, which is a relatively good indicator against the background of a more than 70% fall in the sandwich panel market. At the same time, thanks to the growth of the construction and general contracting services area, the company’s total revenue increased by 7% compared to 2021.
Price waves
Ruukki products are made only from European rolled steel, the price of which rose to a peak in August 2021 and halved in early 2022. At the same time in the cost of panels, galvanized steel with polymer coating accounts for about 25%.
At the same time, given the substantial increase in the cost of transportation services and the rise in the euro, the price of imported sandwich panels for the year increased by 50% in hryvnia equivalent. Nevertheless now there is a tendency in the market to considerable decrease of transport cost as well as inertial fall of world steel prices that in the nearest perspective can lead to reduction of sandwich-panels prices by 15-20%.
The main method of delivery in the market of metal construction is road transport. In 2021 the cost of delivery by truck from Poland to Kiev was about 65 thousand UAH. In the spring of 2022 delivery from Poland due to rising fuel prices and limited supply of transport has doubled in price, and in December 2022 was back to the prewar level.
In 2021 the peak cost of load-bearing steel reached almost 70 thousand UAH per ton, mainly due to the high cost of rolled steel. At the end of 2022 due to the decline in metal prices by almost half the cost of steel decreased by about 23% – to 54 thousand UAH per ton.
Recovery Opportunities.
In the spring of 2022, when the company had less workload on the main projects, we have developed a technology for the construction of frameless houses made of sandwich panels, which can be used for ultra-fast construction of houses and cottage towns. To demonstrate the benefits of this technology, we plan to install two demonstration frameless houses near Kiev. For this purpose we have already made house sets in Poland for 20 and 40 square meters houses and we are going to install them in spring. Now we can see the interest in this technology on the part of institutional funds and private investors in the segment of cottage building, which will grow rapidly after Ukraine’s victory.
Another innovation of ours is the development of technology for construction of multistoried buildings using sandwich panels as outer walls, which allows a developer to get up to 5% more space.
In general it can be noted that the technology of rapid construction with steel solutions has a great perspective in the reconstruction of commercial real estate – where the investor understands: the sooner the business is built, the sooner it will begin to bring income.
CONSTRUCTION, DEMAND, galvanized steel, RAUTA, STEEL, STEEL CONSTRUCTION
Hotel operator Ribas Hotels Group (Odessa) started construction of WOL.GREEN Polyana complex in Zakarpattya, Ribas Hotels Group founder Artur Lupashko said,
“We are implementing our new project WOL.GREEN Polyana together with the Arena Bud development company in Zakarpattya. Construction has already begun,” he said on Facebook.
WOL.GREEN Polyana – is a complex of 78 apartments with own SPA and swimming pool, co-working place, fitness-centre, equipped sportive zones in the open air.
Lupashko reminded that the format WOL home+hotel, realized by the operator, suppose the possibility of short-term and long-term rent. In this case investors are offered to become a co-owner of the complex, to buy an apartment, which will be managed by the company Ribas Hotels Group.
“We are constantly moving and developing our hotel industry and country in all conditions and we see that the Ukrainian investor is ready to invest in the future of our country”, – added Lupashko.
Ribas Hotels Group cooperates (management, franchising and booking) with 26 hotel and restaurant properties (city, beach and ski hotels). The company’s portfolio includes business hotels Wall Street by Ribas and Bossfor by Ribas, hotel Wol.121 by Ribas (Odessa), ski hotel Ribas Karpaty (Bukovel, Ivano-Frankivsk region), beach complex Richard by Ribas (Gribovka, Odessa region). Hotels in Lviv, Kyiv, Odessa and other cities, as well as in Poland are now at the design and construction phase.
The total room stock of the network is more than 1 thousand rooms in different forms of cooperation in eight cities and resort locations in Ukraine.
UAH 7.6 billion will be allocated for construction, reconstruction and capital repairs in 2023 according to the Program of economic and social development of Kyiv in 2021-2023, which is half as much as in 2022.
According to the press service of the department of economy and investment of the Kyiv City State Administration (KCSA), the relevant decision to amend the program adopted by the deputies of the Kiev City Council on Thursday.
According to the industry distribution the largest amount of the budget funds will be directed on the projects in the field of transport, transport infrastructure and road sector – 3,6 billion UAH, where about 1 billion UAH is the road fund. According to the program 2.7 billion UAH will be directed to housing and communal services, 792.2 million UAH to health care and 394.7 million UAH to education.
It is noted that in 2023 in the capital will continue reconstruction and building on the sections of the Kiev ring road, reconstruction Shulyavskogo overpass and development of the capital subway.
Much money in the sphere of housing and communal services is provided for large infrastructure projects, the implementation of which is important not only for Kiev, but also for the whole Kiev region. In particular, we are talking about reconstruction of Bortnytska aeration station and consolidation of sludge fields dikes near it, technical re-equipment of household waste landfill sites in Podgortsy village, reconstruction and technical re-equipment of “Energia” plant.
More than 101 million UAH will be directed to the reconstruction of sewage collectors and water supply facilities.
Funds will also be used to restore facilities after enemy’s rocket attacks. In particular, to repair CHP-5 and CHP-6, as well as to complete the restoration work started this year on the residential buildings on Glubochytska and Ostapa Vyshny streets.
The Ministry of Development of Communities and Territories of Ukraine has updated indirect housing construction cost indicators by region for the first time since the war, the ministry’s press service said, citing Deputy Minister Natalia Kozlovskaya.
The corresponding order Minregion signed on November 17, 2022.
Previously, since February 24, 2022, due to the military aggression of the Russian Federation, state statistics agencies suspended publication of statistical information needed to calculate the indirect cost of construction.
Given the importance and the need to address this issue, according to Kozlovska, the Ministry of Regional Development initiated a change in the procedure for determining and applying the indirect cost of housing construction by regions of Ukraine, which allowed to restore the process.
“During martial law to calculate the indirect cost of construction, the indicators calculated as of January 1, 2022, adjusted for the consumer price index provided by the State Statistics Committee,” – explained the deputy minister.
The updated figures are calculated as of October 1, 2022 and are published on the website of the Ministry.
The indirect indicators of housing construction costs by regions are used to determine the amount of public investment directed to the construction of housing for citizens in need of better housing conditions and state support in accordance with legislative acts of Ukraine, to determine the share of public investment in the construction of such housing and the amount of soft loans granted to certain categories of citizens to address housing issues.
The Antonov State Enterprise (Kiev) has started the construction of a second An-225 Mriya aircraft to replace the one destroyed by the Russians in February during the hostilities in Gostomel (Kiev region), said Yevhen Gavrilov, director general of the enterprise
“The works are being carried out in a secret location. The second An-225 will be built using both new parts and parts of the damaged aircraft,” Gavrilov told Bild.
According to him, the second Mriya is already 30% ready. The construction cost is estimated at EUR500 million.
Gavrilov said that at an exhibition at the Leipzig/Halle International Airport, where Antonov Airlines is temporarily based, there are plans to organize a sale of merchandise to raise funds for the construction of the aircraft.
Meanwhile later the company clarified that there are some inaccuracies in the previously publicized information: only design work has begun and there are only 30% of components for the new aircraft.
“Design work in this direction has now begun. According to the available expert estimates, there are currently about 30% of the components that can be used for the second prototype aircraft. The cost of building the aircraft is estimated at least at EUR500 million. However, it is still too early to talk about the specific amount,” clarified the SE “Antonov”.
Besides, the company added that “more detailed information will be disseminated after Ukraine wins the war”.
At its meeting on Monday, October 24, the Zhytomyr City Council plans to allocate land plots for the construction of two bio-CHP plants planned by NJSC Naftogaz Ukrainy, Mayor Sergei Sukhomlin said.
“On Monday we are holding an extraordinary session, providing land plots for the construction of large bio-CHPs in Zhytomyr. Many thanks to Naftogaz. It has already ordered equipment, memorandums on construction have been signed with it,” he said during the Energy Club discussion on Thursday.
According to him, these CHP plants, which will also operate on RDF (Refuse Derived Fuel, fuel from waste after sorting – ER), produced at a recently opened waste processing plant, will provide an opportunity to receive 15 MW of electricity for the city and reduce gas consumption in the OZP up to 5 million cubic meters m, while 43-45 million cubic meters are planned for 2022. m, and in 2015 consumption was 97 million cubic meters. m.
At the same time, the mayor noted that several additional quarterly local boiler houses on wood chips have already been put into operation in the city this year, and the thermal power plant that was opened last year on this raw material additionally supplies 1.1 MW of electricity to the network.
“In conditions when Zhytomyr was completely de-energized as a result of Russian missile attacks on October 18, this helps a lot,” Sukhomlin concluded.
At the same time, he said that the city authorities, over the past two days after the enemy strikes, developed a plan to provide critical enterprises with energy resources, in particular, with the help of generators.
“We have allocated funds. Now we urgently buy high-power generators in Turkey,” Sukhomlin said.
He explained that these generators will be used to power the water utility, the main 600 kW sewerage station and 26 pumping stations.
“At least in this case, we will supply water, hourly, but we will,” the mayor assured.
In addition, he said that approximately the same plan with generators is designed for heat communal energy, which includes 10 district and 32 quarterly boiler houses, in particular, the city will have about five or six teams with generators of 250 kW, which will include quarterly boiler houses for four to five hours to warm up the system.
“We are working on this system so that the city does not remain without heat and water, because a potbelly stove in every apartment in a multi-storey building is a terrible picture,” the mayor noted.
According to him, in extreme cases, in each microdistrict of the city, according to the developed plan, there should be large heating points located, for example, in kindergartens or schools where there are autonomous boilers.
“We faced completely new challenges. We simply counted on savings. And when the system cannot work because there is simply no electricity, we were not ready for this,” the mayor stressed.
As reported, in Zhytomyr on October 18, as a result of strikes inflicted by Russian invaders, electricity and water supply stopped working. As the mayor Sergei Sukhomlin reported, the city remained completely de-energized and deprived of water supply for an hour, hospitals worked on backup power.
During the day, according to him, 25-30% of the city is connected to electricity, but the capacity is still not enough for the full operation of the water supply and sewerage.
Sukhomlin said that it is still difficult to assess the extent of the damage and, accordingly, how long it will take to completely eliminate the consequences of the strike, while noting that everything depends on the issue of capacity.
At the end of September, Sukhomlin announced the opening of the first waste processing plant in Ukraine, suspended at the beginning of the war, tentatively in the next few weeks.
He noted that the volume of RDF raw materials, which can be produced from waste produced by the city and used for heat production, can replace 20 million cubic meters. m of natural gas per year.
According to information on the website of the Zhytomyr City Council, the capacity of the waste processing plant, the construction of which began in May last year, is 0.5 million cubic meters. m per year.
In early October, Naftogaz announced that it had begun preparatory work for the construction of thermal power plants that will run on biomass (wood chips) and RDF in Lvov and Zhytomyr. The planned period for putting objects into operation in Lviv is the first quarter of 2023, in Zhytomyr – the fourth quarter of 2023.
In total, Naftogaz intends to build at least nine thermal power plants and bio-boiler houses in eight regions of Ukraine with a total capacity of 250 MW of thermal energy and 52 MW of electricity.
