Issue 300 | 4 October 2021 - Turner & Townsend alinea

Materials and commodities

Steel increases | British Steel has added temporary surcharges totaling £30/tonne because “the costs of energy and transport continue to increase significantly” and they can no longer be absorbed. The company did note that there has been a relaxation in the cost of iron ore, but coking coal increases were an issue.
Iron ore | The rapid decline in iron ore prices (coupled with high shipping costs) has prompted many producers to pause operations.
Energy | There is a global shortage of energy caused by supply constraints at producers, for a number of reasons, which has coincided with a post-pandemic activity rebound. Reasons for reduced output include the phasing out of coal, a poor year for wind generation, and less maintenance work carried out during the pandemic.

Labour | Since the relaxation of Covid guidelines, the workforce at Hinkley Point C will be increased by a third to 8,500. During the pandemic only 1,500 people were on site.
Retail | Aldi is to build 100 stores across the UK in the next two years and is expanding its logistics infrastructure, spending £1.3bn.
Net Zero | New rules ensuring that companies working on government contracts over £5m/year have a commitment to becoming net zero by 2050 have come into force. Suppliers will have to produce a carbon reduction plan and outline measures to reduce emissions.
Housing | Data from HMRC on residential deals in August 2021 shows that more than a million transactions have taken place this year. The last time that happened was in 2007. Analysts do not expect the end of the Stamp Duty holiday to cause sales to slow dramatically.

Furlough | The employment support scheme ended last week, despite the ONS reporting that 5% of jobs were furloughed just before the deadline.
Freight | Tesco has increased its use of rail freight from Europe, from 65,000 to 90,000 containers a year. The move negates some of the HGV driver shortage and also saves 22 million road miles, producing 76% less carbon. This week the military is being brought in to maintain fuel supplies throughout the UK.
Winter Hardship Fund | The UK government announced a £500m fund for councils to help support poorer families through winter, in light of the energy crisis and reductions in other areas of support.
Jobs fund | The Chancellor will today set out plans for a £500m fund to help UK-based people find jobs in an effort to calm acute labour shortages.
Professional services has become the latest sector to warn of severe labour shortages with some firms turning work away because of a lack of staff. Research by KPMG and the Recruitment & Employment Confederation showed a sharp increase in both permanent appointments of staff and pay levels as the number of candidates fell.

China’s factory activity fell due to restrictions on energy usage and the increasing cost of input materials. Manufacturing PMI fell to 49.6 with output, new orders, employment, and new export orders all falling.
Haulage | According to consultants Transport Intelligence, Europe is short of 400,000 HGV drivers. The decline in the UK is one of the largest, with one in seven drivers leaving since 2016, whilst Romania has added the same number (50,000) of drivers in that period.
Global trade is expected to grow at its fastest pace for 11 years, increasing by 10.8% this year, according to the World Trade Organisation.
Evergrande | The distressed Chinese developer missed another repayment deadline and is to sell a half-stake in its property management arm for $5bn. Its current liabilities amount to £305bn and there are concerns over the global repercussions of its liquidity crisis. Share sales were suspended ahead of a report of a “major transaction” and reports that a rival organisation is to take a majority share.