Firm adds potential of Chinese steel being 鈥榙umped鈥� into UK mitigated by certain specifics

London cost consultant Core Five has said it is still too early to say what the impact of a trade war between the US and China will be on UK construction.

The firm said there was not yet enough evidence to point to whether the effect will be inflationary or deflationary.

It said: 鈥淎 trade war that harms growth and reduces demand will be deflationary. This is particularly so for construction where output is highly responsive to a change in demand. The trade war between the US and China involves tariffs so high as to be an effective embargo.鈥�

steel

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Chinese steel is less likely to be 鈥榙umped鈥� into the UK because it is rolled to suit US section sizes, the consultant said

But it added: 鈥淗owever, our experience of supply chain disruption post-covid was inflationary. Producers looking for new markets will need to adjust supply chains and logistics but also product specification to meet local standards.鈥�

Core Five said that the risk of Chinese steel being dumped on Europe and the UK would be restricted by certain specifics.

It said: 鈥淪teel used on UK buildings conforms to British and European sizes and standards and is therefore largely reliant upon the European market who manufacture to the same. This provides a level of resilience against tariffs and trade wars given the market is a somewhat closed loop.鈥�

It added that large amounts of Chinese steel is rolled to suit American section sizes which are not used in UK buildings. And it said British developers might not want to use Chinese made steel 鈥渄ue to its carbon credentials鈥�.

But it admitted that inflation was a more likely outcome of the trade war between the US and China. It said: 鈥淎s the tariffs lead investors to question the dollar鈥檚 safe heaven status, inflows to Europe are boosting the Euro 鈥� more so than the pound. The Euro鈥檚 appreciation will be inflationary. In 2024 the EU accounted for 60% of the UK鈥檚 construction materials imports.鈥�

Meanwhile, the firm said the impact of ISG鈥檚 collapse last September had been mitigated by clients stepping in to help out.

It said: 鈥淲hile it is true that there were some supply chain casualties, it was good to see clients exploring ways to continue projects and ensure payments continued to the supply chain where possible. Without this approach, the outcome could have been significantly worse for all parties involved.鈥�

In its latest update for Q2, the firm said its tender price index remained at 3% for the year on mainstream projects while it was forecasting a figure of 3.5% for major projects.

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