According to ING’s Maurice van Sante, the recent surge in Oil and Gas prices, triggered by conflict in the Middle East, is set to significantly increase costs in the European building materials sector [1]. Producers of materials such as cement, concrete, and bricks are heavily reliant on energy, and their exposure to Oil and Gas remains similar to levels seen in 2022. As a result, elevated energy prices are likely to be passed on to construction companies, which will pressure profit margins and lead to higher overall building costs [1].
Van Sante notes that while the sector has reduced its reliance on oil as a heating source between 2010 and 2020, there has been little further decrease in the past five years. From 2020 to 2025, companies have mainly phased out coal usage, but the relative amount of gas used has remained stable for the last 15 years. This shift has made building material companies more sustainable, yet their dependency on oil and gas has not significantly decreased [1].
The recent uptick in building permits provides some optimism for stronger demand in the sector. However, a sustained recovery will depend on greater stability in energy markets and continued innovation in sustainable production methods. Without these factors, rising production costs risk pushing sales prices higher, which could weigh on demand. Van Sante emphasizes that a firm commitment to greener, less energy-intensive production processes will be essential for long-term resilience in the sector [1].
CONCLUSION
The surge in energy prices due to Middle East conflict is expected to raise costs and pressure margins in the European building materials sector. While recent increases in building permits offer hope, sustained recovery hinges on energy market stability and further sustainability efforts. Without these, higher production costs may dampen demand and profitability.