Europe's construction market is expected to grow in 2007 giving good prospects for the aggregates market

Europe's construction sector is forecast to see its 14th successive year of growth in 2007, according to economic industry forecasting group Euroconstruct. Europe is expected to build on the 3.2% growth seen in 2006, with a further 2.2% increase in activity this year to reach a value of 1378 billion.

Europe's construction market is dominated by France, Germany, Italy, Spain and the UK, which together represented 73% of construction output in the Euroconstruct area in 2006. Growth rates in these countries are anticipated to be slower in 2007 than last year. Spain and the UK are likely to be the best performers with a 4.5% and 2.6% increase,

respectively. But growth is likely to be lower than the Euroconstruct average in France (1.7%) and Germany (1.2%), while Italy's market is expected to be static.

While growth in Europe's more mature construction markets is likely to be slower than average, the strongest gains this year are predicted to be in Eastern Europe. Infrastructure investment in new EU Member states, through preferential loan rates and EU grants, is helping to drive this growth and is attracting private investors to the region.
The latest report from the Construction Products Association (CPA) suggests that the quarried materials and building products industry is already seeing the effects of rising demand. According to CPA economics director Allan Wilén, the UK industry has seen the best quarter for more than two years and the growth is expected to gather momentum during the rest of the year.

Early first quarter 2007 figures released by Cemex show that sales volumes in Europe are rising. The report indicates that there has been a 4% increase in cement demand in the UK compared to the same period last year, while volumes in Spain have grown 3%.
Further rises in demand for aggregates in 2007 is also expected to drive up materials prices in Europe. "While pricing around Europe is dependent on the strength of individual domestic markets, prices throughout Europe are rising," said Hanson managing director for Continental Europe Justin Read.

Euroconstruct expects construction growth to slow in 2008 to around 1.5% per year, followed by 1.4% in 2009, to take the industry to a value of 1418 billion. However, Read warned that this will have implications for the aggregates sector, "If demand continues to rise, prices are likely to be pushed higher due to limited reserves in Europe and industry-wide difficulty in gaining permission for new quarries."

Published in Aggregates Business Europe April - May 2007 Volume 1 Issue 1