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
The capacities of Ukrainian enterprises are sufficient to satisfy the need for roofing materials for the restoration of housing, social and critical infrastructure facilities affected by Russian aggression, Hanna Hontarenko, the acting director of the Ukrainian Steel Construction Center, told Interfax-Ukraine.
“Based on the results of work of the operational headquarters for the provision of construction materials in the Ministry of Regional Development, the needs of each region for roofing materials necessary for the restoration of housing, social and critical infrastructure have been determined. The internal potential of enterprises producing roofing materials in Ukraine allows us to meet these needs as soon as possible,” she said.
At the same time, the expert added that since the end of February 2022, the construction sector and the metallurgical industry have undergone significant changes.
“The destruction and occupation of the capacities of the largest metallurgical plants Azovstal and Illich Iron and Steel Works, a reduction in demand in the domestic market, an increase in the exchange rate and the cost of logistics – all these factors led to an increase in the cost of rolled metal. Since the beginning of the year, the price for certain assortment items has increased by more than 30%,” she said.
According to her, due to the aforementioned factors, steel structures manufacturers work with a low level of loading, however, due to stocks in warehouses and the work of metallurgical enterprises in Zaporizhia, Dnipro, Kryvy Rih, there is no shortage of rolled metal.
“But the situation will change when stocks are exhausted for certain assortment items that cannot be manufactured in Ukraine, and then demand will have to be met through imports,” the expert says.
As for the issue of steel roofing, the raw materials for it, namely rolled products, are produced by Zaporizhstal. Galvanizing and galvanizing/painting is carried out at the facilities of Unisteel LLC (the design capacity is 100,000 tonnes/year) or Modul-Ukraine LLC (the design capacity is 200,000 tonnes/year).
HOUSING, INFRASTRUCTURE, MANUFACTURERS, RAUTA, roofing materials
The Ukrainian Steel Construction Center is collecting projects and construction concepts for the renewal of Ukraine, the press service of the center has reported.
The corresponding section has been created on the center website. The projects of Rauta, Poltava-Proekt, Metinvest-SMC, Ukrstal Construction and others have already been placed in it.
The center turned to steel construction market participants with a request to share ready-made projects and design solutions for construction with minimum construction time and the use of elements with a maximum degree of prefabrication.
The matter concerns residential projects of prefabricated buildings to accommodate Ukrainian citizens who have lost their homes, as well as complex solutions for capital residential facilities and social infrastructure facilities (hospitals, schools, kindergartens, warehouses, shops).
All the information provided and contacts of the project authors will be posted on the uscc.ua website in the section “Construction projects and concepts for the restoration of Ukraine” https://www.uscc.ua/filterpages/category/proekti-ta-koncepcii-budivnictva-dla-vidnovlenna-ukraini
The Ukrainian Steel Construction Center brings together the largest participants in the national steel construction market. To date, it includes more than 60 specialized companies.
Engineering and construction company Rauta has developed master plans for the construction of prefabricated camps for internally displaced persons, which provide for the construction of houses from sandwich panels.
“The concept of camps for migrants is based on the highest possible speed of construction, comfortable layouts and increased energy efficiency. The unification of production processes and ease of installation make it possible to ensure mass construction of camps in any region of Ukraine in a matter of months,” Andriy Ozeichuk, Director of Rauta, who was quoted by the press company service, said.
According to him, the master plans take into account various needs and funding opportunities. At the same time, houses made of sandwich panels can be effectively operated for several decades. Terms of implementation of small towns are 3-12 months, depending on building area.
In addition, if the need for settlements disappears over time, houses can be dismantled and moved to another location, as well as repurposed to perform new functions: recreation centers, administrative centers, outpatient clinics, small retail or office buildings, etc. Sandwich panels can also be efficiently disposed of.
Engineering and construction company Rauta is engaged in the design of buildings, supply, installation and maintenance of frames, sandwich panels, facades, prefabricated buildings, etc. The company acts as an exclusive supplier of products of the Finnish concern Ruuki to Ukraine.
Rauta has developed several options for master plans development, taking into account different needs and funding opportunities, which may include projects for houses with 1-2 rooms with a separate entrance, own bathroom and kitchen.
“The concept of settlements for migrants is based on the highest speed of construction, comfortable layouts and increased energy efficiency,” said Andriy Ozeychuk, Rauta director. “The unification of production processes and ease of installation make it possible to ensure the mass construction of camps in any region of Ukraine in a few months.”
A distinctive feature of the Rauta proposal in comparison with alternative solutions for temporary residence is that houses made of sandwich panels can be effectively operated for decades and, if necessary, people will stay in such settlements for a long time with a comfortable standard of living.
If sometime the need for such settlements disappears, then the houses can be easily dismantled and moved to other places, as well as repurposed to perform new functions: recreation facilities, administrative centers, outpatient clinics, small commercial or office buildings, etc.
You can see the refugee houses layouts and possible options for master plans at the link.
The new technology of prefabricated one-story residential buildings makes it possible to provide people with high-quality houses as quickly as possible.
Ruukki sandwich panels are used as load-bearing and envelope structures of houses, which allows to reduce the cost of construction due to the absence of the need to build a frame. At the same time, cottages become highly energy efficient (heat transfer resistance R = 7.43 m2K / W) and durable (lifetime is more than 50 years).
Rauta has developed several practical layouts for sandwich panel cottages ranging from 26 m2 to 139 m2. At the same time, layouts with an area of 26 m2 and 49 m2 can be placed in blocks with common partitions. This solution allows to further reduce the cost of construction, as well as to build settlements for people in dire need of housing as quickly as possible.
“The key goal of this project was to create reliable, functional and energy-efficient houses with the shortest possible construction time,” said Andriy Ozeychuk, Rauta director. “The ergonomics of the layouts are deliberate so that even in a house with an area of only 26 m2, a family of 3-4 people can live comfortably.”
BUILD, CONSTRUCTION, DEVELOPED, HOUSE, RAUTA, SANDWICH PANEL, TECHNOLOGY
