Construction Sector Braced for 'Epoch-Making' Crisis as Energy Costs Surge

Experts warn the building industry face an "epoch-making" crisis as Middle East conflict drives up costs for steel, aluminum, and bricks by as much as 50%.

By: AXL Media

Published: Apr 17, 2026, 9:14 AM EDT

Source: RNZ Pacific

The Energy-Intensity Bottleneck in Material Production

John Tookey, a professor at AUT’s school of future environments, describes the current situation as a loomsing crisis that many in the industry are attempting to "imagine away." Unlike other sectors, construction requires immense amounts of thermal energy to produce basic components. Bricks must be fired in gas or electric kilns, plasterboard requires intensive processing, and aluminum extrusions often produced in the Gulf using surplus field gas are seeing their cost structures dismantled by a 22% drop in global oil production capacity.

Strategic Shortages in the Global Supply Chain

The crisis extends beyond fuel for transport; it strikes at the very raw materials needed for infrastructure. Professor Tookey notes that the global requirement to rebuild damaged oil infrastructure will likely divert vast quantities of structural steel toward piping, further tightening the supply and inflating prices for local builders. Furthermore, products derived from petroleum, including all forms of plastics and bitumen for roading, are seeing systematic price hikes. With global shipping and freight charges reportedly up by 44%, the cost of every imported component is being re-evaluated.

Importers Caught Between Rising Costs and Subdued Demand

The Building Industry Federation has highlighted the precarious position of local suppliers. Chief executive Julian Leys reports that some importers are being asked to pay 22% more for the same products due to shipping and port surcharges. In a troubling trend for business viability, some major customers are refusing to accept even modest 3% price increases to cover these costs. This creates an unsustainable environment where importers may effectively lose ten cents on every dollar invested, threatening the survival of smaller players in the building supply chain.