The market for structural steel has easily outperformed the forecast for last year with a speed and force that is ‘unprecedented’, according to professional industry watchers such as David Moore, chief executive of the British Constructional Steelwork Association (BCSA).
“In 2020 the total UK consumption of structural steelwork fell by just over 20%. Even though the supply side has been problematic in terms of lead times and price increases, demand has bounced back by 18% this year. And in 2022 we expect a further rise of 6%, bring UK consumption right back to pre-Covid levels,” he says.
As with all forecasts, this all depends on all things being equal yet last year’s forecast now looks quaintly cautious. This predicted buoyant growth and a ‘tick-shaped’ graph for recovery with a 12.1% increase in 2021 and a further 7.1% increase in 2022.
“The market has undoubtedly changed in terms of which sectors are most active,” Moore observes. “There’s a far greater demand for the shed-type of buildings that take a large amount of steel and are wanted quickly.”
The government’s commitment to build 40 new hospitals has been reflected in the order books, as have infrastructure projects such as HS2. In keeping with the government instruction to work from home during the pandemic, the demand for offices has flattened off yet Moore says there are indications that investors are taking a medium-term view, so that demand will rise in two to three years’ time.
Plans to free up trade after Brexit will also boost the market for structural steel, the BCSA believes. In the last budget the chancellor announced eight freeports for England: East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City, Plymouth, Solent, Thames and Teesside.
These freeports will incentivise investment and job creation through a string of benefits including favourable customs duties, simplified planning and tax breaks such as the suspension of VAT, business rates relief and tariff duties. But their scale and the mixture of infrastructure and warehousing that these freeports need will offer major opportunities to the industry, says Moore. The Teesside freeport alone covers sites across the region and spans 4,500 acres.
The swift return of demand comes against a background of strongly rising prices for steel. As Moore puts it: “There are problems in terms of supply and price, but our members are finding that clients still want to invest in steel-framed buildings, even though there have been ‘difficult’ conversations about cost and availability.”
Some have argued that one factor in determining the price of steel is the use of steel import safeguards, which apply quotas to prevent cheap steel undercutting UK producers. At one point these were to be relaxed but in July they were reinforced at the last minute by international trade secretary Liz Truss. The move came after pressure from the UK steel industry and the European Commission’s decision the week before to renew its steel import safeguards scheme for a further three years. Imports to the UK outside the quotas now face a tariff of 25%.
But Moore believes the price rises simply stem from global demand just as Covid hit production and blast furnaces in Europe closed down. The situation is exacerbated by many countries investing in construction as a way of kickstarting their economies after the pandemic.
“The UK has its own steelmakers in Tata and British Steel but we also import from other countries, including Europe, so if their home demand is high this will be satisfied first before they start to export,” he argues. The price of iron ore has also increased substantially as steel production in China has reached historic levels. That also pushes up costs.
According to the BCSA, cost is not the only matter concerning clients. Sustainability and the ‘climate emergency’ are becoming ever more important when deciding what materials and methods to use in construction.
“A year ago we decided that sustainability is moving higher up the agenda, number two after cost, so we should demonstrate the credentials of structural steel,” Moore says.
The first step towards this is the BCSA’s consolidated road map to net-zero carbon emissions by 2050 which is aimed not only at fabricators but also at the steel makers and the stockholders.
“We’re looking at levers, the actions that can reduce the industry’s carbon footprint. For instance, efficiencies in design so that you use less steel or use a higher-strength steel to make weight savings,” Moore explains. “Other topics are decarbonising the electricity grid, something the government is considering, and we also look at what the steel makers can do in terms of carbon capture, use and storage.”
The result is a compendium of measures that the industry can use to cut its carbon footprint, though Moore is convinced that many fabricators will hit the target of net-zero carbon emissions well before the 2050 deadline. William Hare, for instance, claims to be there already and other fabricators are not far behind.
And the measures taken to achieve this are not especially sophisticated. Moore lists simple measures such as switching to LED lightbulbs, cleaning rooflights and installing automatic door closers to reduce lighting and heating costs. More ambitiously, some fabricators are already using windfarms and biomass boilers to minimise their carbon footprint. All have been approached and, says Moore, have been very open in sharing their different ways of cutting carbon emissions and giving practical examples of what can be achieved.
Moore singles out BHC, based in Carnwath, Scotland, which claims that renewable energy currently fuels 72% of its production and office facilities. The company says that since 2016 it has exported 4.3 million kWh of surplus wind electricity to the National Grid, preventing an estimated 1,364 tonnes of CO2 from being emitted.
Apart from its 500kW wind turbine, BHC also has 12 biomass units which use locally-sourced woodchips to generate 6.2 million kWh a year and heat its offices, workshop and paint facility too. According to BHC, these sources of renewable energy enable it to supply a tonne of steel with 49% fewer associated carbon emissions compared to its carbon emissions before installing the biomass units and wind turbine.
The company is not stopping there, either. BHC plans to build an anaerobic digestion plant that will produce an extra 4.4 million kWh of carbon-free electricity annually. This, in addition to installing a second wind turbine, would cut associated carbon emissions by 70% compared to its output when it had no renewable energy sources.
Yet not every carbon emission from construction steel can be dealt with by renewable energy, and it is not an answer for every fabricator and steel producer.
“There are technologies we can use that can reduce carbon emissions but they won’t solve everything, so there will also have to be an element of offsetting,” Moore admits. “Effectively, companies will buy forests to offset the carbon they cannot reduce by other means but the technology is improving all the time.”
Meanwhile, the BCSA is tackling an issue at the other end of the construction cycle, applying intumescent paint as fire protection to structural steel once it is installed. Last year, in response to lessons learned from the Grenfell Tower fire, the association added a whole new chapter to the 7th Edition of the National Structural Steelwork Specification (NSSS) on specifying and applying intumescent coatings correctly, going into details of the correct thickness to achieve the correct fire protection rating.
This is part of the specification universally used throughout the UK and is now part of the contract between the fabricator and the main contractor. This new specification created a new role – Responsible Painting Co-ordinator – a person charged with enforcing these specifications. Now the BCSA has set up a three-day course, which is tested with a formal examination on completion, so clients can demand to see the certification as proof that the person is properly qualified.
“We’ve paid far too little attention to this in the past, just seeing it as paint on steelwork. It’s not,” says Moore. “It’s actually part of the whole fire protection system and should be done correctly.”
Moore says there are plenty of stories about men in white vans who claim to apply intumescent fire protection for less than it costs to buy the paint; this will put them out of business, he says. Contractors will have to provide documents that show that the right paint has been bought, has been applied correctly and to the right thickness and has been supervised by someone with the right training and certification.
So, despite Covid and Brexit, the outlook for structural steel is positive. Demand is expected to return to pre-Covid levels over the next year, fabricators are already on board with the need to cut carbon emissions and fire protection paint is now fully incorporated into the whole specification process.