Contructrion prices have steadily increased for years in Luxembourg, but the current crisis is exacerbating the situation. Raw material costs have exploded over the last few weeks, and the sector is worried about imminent shortages with some products, too, said Paul Nathan, vice president of the Chamber of Trade.
Steel is a critical raw material for the construction sector. Ferrac is a metal processing business supplying large construction firms. In normal times, they have stock for 3-4 months. Right now, they only have enough for around six weeks, says manager Luis Nunes.
Placing big orders is difficult. Steel prices have soared over the past two years, with two increases due to the pandemic, and again due to the war in Ukraine.
Private customers who already have a contract will not necessarily feel this increase, but future projects will become more expensive. There may well be material shortages adding to the problem soon, says Paul Nathan. In the worst case, this might even halt construction.
It is important to strengthen local production, Nathan explains. Luxembourg is lucky to still have an active cement industry in the country. Similarly, steelworks must be kept in the country. The circular economy can also be helpful. Recycling of materials when buildings are torn down must be improved.
The problem for the sector, like many others, is a lack of predictability. Luis Nunes from Ferrac says they can hold out until the collective leave in summer, but what happens afterwards is uncertain. A lot depends on how long the war in Ukraine will last.
