European building materials – a golden age?

Leveraging proprietary, first-of-its-kind analysis that goes deeper into the true drivers of construction end-markets, we reach a clear conclusion: for European building materials, this is no golden age of construction. Our work, underpinned by the full breadth of UBS Evidence Lab capabilities, the global UBS Research platform, and unique modelling, including comprehensive ETS (Emissions Trading System) analysis and rigorous lead-indicator back testing, shows 1) a far more bearish demand outlook for Europe, 2) a more bullish demand outlook for parts of US construction, and 3) an even brighter EU cement price outlook than consensus.

Stronger infrastructure growth, a stronger recovery in the US vs EU, and crucially a new regime for EU cement prices suggest the best is yet to come. We use UBS HOLT's proprietary Carbon Transition Model and analyse just how steep the first-time removal of free CO2 allowances in 2026 could be, finding a headline 2.5% reduction could really be closer to an "effective" 10% cut, triggering cement price inflation as producers pass through this carbon cost shock.

With average EU lightside exposure to EU residential and non-residential ~70%, a recovery here is crucial to drive earnings momentum.