Products prices up 10-15% as demand ‘far in excess of supply’

Image: Dreamstime/Bernhard Lux

Prices for construction products and materials have risen by 10-15% as demand remains “far in excess of supply”.

In their latest statement on construction product availability, John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, warned of “rapid and sustained” price inflation, long lead times, and uncertainties regarding deliveries.

The co-chairs of the Construction Leadership Council’s product availability working group said it was also clear that the global shipping industry is “far from recovered” from the disruption caused by the coronavirus pandemic.

The products most affected are those used in housebuilding and domestic repair, maintenance and improvement (RMI), including roofing products, timber, insulation, landscaping products, blocks, sealants, PIR insulation, kitchen carcassing and products that use plastic, some windows, and bagged cement.

Newcomb and Caplehorn said bagged cement was particularly hard hit due to ongoing “unprecedented” demand, but both bagged and bulk cement are on allocation. All UK kilns are operating but it may be some time before stocks return to normal.

They predicted that supply of timber would tighten into the third quarter of this year, following the Scandinavian holiday and maintenance season in July but there were some signs that global demand was beginning to ease.

Meanwhile, within infrastructure and commercial construction, steel and aluminium are experiencing significant supply disruption and price inflation, and there is also concern around the availability of steel cabling management systems, which could continue into early 2022.

Overall, prices are reported to have risen 10-15% for products and materials but for specific products, especially timber, increases have been 20-50%, and above 100% for OSB and other sheet materials.

Newcomb and Caplehorn added that the availability of labour was proving another headache for the sector. They said: “Labour, or rather the lack of it, is a rising concern.  All regions report hauliers/HGV/LGV drivers are in short supply and very difficult to recruit, which is contributing to longer delivery times, particularly away from major transport routes and urban areas. 

“We continue to support the Road Haulage Association in its discussions with the Department for Transport to address the shortage. We are now receiving reports of other vacancies being hard to fill, from relatively unskilled roles, such as yard operatives, to experienced bricklayers.

“These labour shortages are being exacerbated by the growing number of non-symptomatic drivers, tradespeople, merchant and manufacturing staff required to self-isolate after coming into contact with someone who tested positive for Covid-19. This will further stretch the supply chain.”

They warned that if the situation continued, smaller, regional developers may be forced to start delaying work on new sites until they have more certainty around product availability and lead times.

As far as home improvement and RMI work is concerned, they said that most work in this area is covered by JCT contracts, which have no facility for flexibility on material costs, leading to fears that business failures could arise from unsustainable contracts.

Newcomb and Caplehorn added: “Alongside pricing, stability and accuracy of supply remains the overarching concern and regular, accurate and transparent communication throughout the supply chain to the end client is deemed vital by all. It is important that all parties recognise the extent of the extraordinary challenges we are currently experiencing and adopt a flexible and collaborative approach to finding solutions.”

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