Brazilian construction GDP to grow 3.5% in 2022, trade group says

The Brazilian construction industry chamber, CBIC, has raised its forecast for the sector’s gross domestic product (GDP) in 2022 to a 3.5% increase, from the previous 2.5% guidance, due to federal programs and renovations expected for the second half of the year, it said on Monday July 25

According to the industry body, such growth would still be insufficient to offset an almost decade-long contraction. Taking into account a rise of 3.5% this year, GDP for the industry would still be down by 23.44% in the 2014-2022 period, it added.

Changes to the federal Casa Verde e Amarela housing program in Brazil that could accelerate activity toward the end of the year were the main driver for the improved forecast, CBIC stated. The association was also anticipating more family spending in the second half of 2022 to boost renovation work.

On the other hand, construction companies were still weary of higher inflation and interest rates.

A survey conducted by the industry trade group in the second quarter with more than 400 companies found that 47.7% saw rising input costs as the main problem with the sector at the moment, with 29.8% citing the interest rate increase in the country.

“A shortage or higher costs of input materials were, for the eight consecutive quarter, [seen as] the main problem for the construction industry,” CBIC said.

It went on to specify steel rebar as the costlier material from July 2020 through June 2022, according to the construction cost price index, INCC, calculated by the FGV foundation. The rebar price rise was the highest during that period, at 99.60%, with steel pipes and tubes in second place, at 89.43%, the association said.

Fastmarkets’ latest price assessment for steel reinforcing bar (rebar), domestic, monthly, delivered Brazil was 4,970-5,200 Reais ($912-955) per tonne on July 8, down by 5% from 5,170-5,535 Reais per tonne on June 10.

It was, however, still 14.53% higher than 4,280-4,600 Reais per tonne on December 10 last year and up by 105.87% from 2,410-2,530 Reais per tonne in July 2020.

A demand recovery from slower first-quarter activity and higher international prices caused by the Russia-Ukraine war boosted rebar prices in Brazil until June, when the trend reversed and started following discounted offers from Turkey more closely, albeit at a slow pace.

Fastmarkets assessed the price for steel reinforcing bar (rebar), export, fob main port Turkey at $690-700 per tonne on July 21, a decrease of $10-20 per tonne from $700-720 per tonne the week before, $30-40 per tonne higher than $650-670 per tonne a month earlier but $270-290 per tonne lower than the 2022 high of $960-990 per tonne on April 7.

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