Geopolitics and construction: how metals, energy and transport are causing costs to explode

Metals: prices that explode with each international shock

Construction is based on essential materials such as steel, copper or aluminum. These resources are often produced in specific geographic areas, which makes them more vulnerable to crises.

The war in Ukraine is a revealing example. Russia and Ukraine are major players in steel and mineral production. Since the start of the conflict in 2022, steel prices have increased sharply in Europe. Concretely, some construction companies have seen the price of their metal structures increase by 30 to 50% in a few months.

Another concrete case: copper, essential for electrical networks. Chile, the world’s largest producer, has experienced various mining incidents and social movements in recent years, including a strike at the world’s largest copper mine in 2024. The result has been significant price volatility. In December 2025, the red metal sold for $12,000 per ton. This represents an increase in its price of 40% in one year. For a real estate developer, this can represent several thousand additional euros on a medium-sized project.

Political decisions often have immediate impacts. When China limits its exports to favor its domestic market, world prices increase. A manufacturer in France or Africa can then pay more for a material produced on the other side of the world. The same is true more recently with the customs duties introduced by the Trump administration in the United States.

Energy: when the price of oil makes every construction site more expensive

Energy is everywhere in construction. It is used to produce materials, operate machines and transport goods. And it’s probably one of the most geopolitically sensitive positions.

Sanctions against Russia following the outbreak of war in Ukraine have disrupted global energy markets. The result was a sharp increase in fuel prices. More recently, conflicts in the Middle East, notably Iran-US tensions and the blockage of the Strait of Hormuz, caused oil prices to soar beyond $100 per barrelleading to fears of global shortage

For a public works company, this immediately translates into an increase in construction site costs. Earth-moving machines, trucks and cranes mainly run on diesel. A 20% increase in fuel can explode a project’s logistics budget. This increase impacts not only transport, but also the manufacturing of materials such as bitumen, used for roads.

Electricity is also affected. In Europe, the energy crisis of 2022-2023 has led to an explosion in production costs for cement and steel plants. Some factories have even slowed down their production, creating shortages and delays on construction sites.

Transport: disruptions that are expensive

Transport is an essential link in construction, often underestimated. However, materials sometimes travel thousands of kilometers before arriving on a construction site.

The blockade for almost two months of Strait of Hormuz in the Middle East, through which 20% of oil and liquefied natural gas usually transit (LNG) products, involves massive delays in deliveries and an increase in the cost of ocean freight and materials.

If we go back a few years, lockdowns during the COVID-19 pandemic disrupted global supply chains. The price of maritime transport has been multiplied by 3 to 5 on certain routes. A container of materials sometimes cost several thousand euros more than before the crisis. Even more recently, tensions in the Red Sea have disrupted certain trade routes. Ships had to go around Africa, extending delays and increasing costs.

Ultimately, construction companies suffer the direct consequences of these geopolitical events. Indeed, this can mean waiting several additional weeks to receive materials, with late penalties involved.

Commercial policies: decisions that immediately impact quotes

Political decisions can also influence costs in a very direct way, notably through customs duties. For example, during the trade war between the United States and China, additional taxes were imposed on many products, including steel, wood and aluminum. This led to a rise in prices on the global market.

For a construction company, this means higher quotes and sometimes less profitable projects. In some cases, projects have even been postponed or canceled due to increased costs.

Whether it is an armed conflict, a political decision or a logistical crisis, each international event can have direct repercussions on a construction site at the local level. Understanding these mechanisms has become essential for construction professionals, in order to anticipate risks and adapt in an increasingly uncertain environment.

By Alexandre Masson (external speaker)

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