As the UK continues to open up after a year of lockdowns and other restrictions, the construction industry has been at the forefront of the economic recovery with activity levels at a seven-year high.
Soaring demand has strained the availability of a number of key materials, with some experiencing double-digit inflation.
Earlier this year, the UK Government asked the Construction Leadership Council to monitor the situation, which saw it set up the Products Availability taskforce. In the months since it was founded, it has added more and more items to its list of products facing constraints.
Construction News looks at how some key materials have been affected and how the situation could develop in the coming months.
Last month’s CLC construction product availability statement said timber remained among the “worst affected product areas” for the construction industry.
In its market statement for May, the Timber Trade Federation (TTF) said stock levels were languishing due to high international demand, which had prevented UK-based buyers from rebuilding their stock since the beginning of the pandemic. Demand for timber has skyrocketed in the UK and elsewhere, as housebuilders move to catch up on the progress they missed during the lockdowns, the TTF claims. The ever-larger focus on net-zero construction has added to demand, as timber has large carbon-storage potential, it said.
The federation also said Brexit-related complications are further squeezing UK timber stocks, as 80 per cent of the softwood used in building comes from Europe. In new-build housing, 90 per cent of the softwood comes from the continent. Timber is the third most imported construction item according to the Department for Business, Energy and Industrial Strategy (BEIS), with the industry spending £816m on it last year.
Prices have shot up over the past year, with the cost of sawn wood up 16.6 per cent in March 2021 compared to 12 months ago.
Demand is not forecast to ease any time soon. TTF chief executive David Hopkins told Construction News: “There are no indications demand is about to go down, with housebuilders continuing to ramp up work, and enquiries for repair, maintenance and refurbishment work on the rise.
“The state of demand means that timber is being allocated as quickly as it is being produced and imported into the UK,” he added. The timber market is likely to remain tight “well into 2021 and beyond, with softwood demand being forecast to increase worldwide until at least 2025”.
With sawmills in Europe normally shut during the summer for maintenance work and holidays, this could be “the new normal”, Hopkins added.
Cement was added to the CLC’s list of items facing shortages back in April. But supply has improved, according to Mineral Products Association (MPA) chief executive Nigel Jackson. Deliveries of bulk cement, which makes up the majority of the UK market (over 80 per cent), are “broadly back to normal”, he told CN. “We’re not aware of any projects impacted by bulk cement shortages,” he said.
For bagged cement (equal to around 18 per cent of all cement sales in the UK), shortages first seen in February continue, partly due to an increase in demand as the industry began to open up following the lockdown.
Supply has also been hit by production constraints, Jackson said. Demand slowed in the fourth quarter of 2020 and many companies opted to carry out kiln maintenance, which requires plants to be shutdown. Producers have also struggled to source hauliers to transport cement around the country, according to Jackson.
Unlike timber, the vast majority of cement used in the UK is produced in the country. Jackson said producers will be able to “flex” to meet demand, and the shortages in bagged cement should be resolved in a few months.
Global demand for steel is outstripping supply. Earlier this month, the UK manufacturing trade association British Electrotechnical and Allied Manufacturers Association (BEAMA) reiterated that a dramatic reduction in steel production in early 2020 had caused a worldwide shortage, though output started increasing in mid-2020. The association said that the “availability of steel remains problematic”, which is set to continue for months before it eases.
British Steel stopped taking orders on structural steel sections due to “extreme demand” last week and a director of a steel specialist told Constructions News that he was worried the move will lead to “panic buying”, making the situation worse.
As availability has dropped, prices have increased. According to BEIS, the price of fabricated structural steel was up 17.6 per cent higher by March 2021 since the previous year.
The Electrical Contractors Association (ECA) said this month that demand for cable steel had soared as companies rushed to complete projects they were forced to halt due to the pandemic. ECA chief executive Steve Bratt said: “Our advice is to order the materials you need in good time to ensure you can finish as planned.”
Official data has shown that infrastructure was the first sector to exceed pre-pandemic output levels. This has led to more demand for aggregates. “We have never been so busy,” British Aggregates Association executive officer Richard Bird told CN, adding that the biggest problem was finding enough lorries to transport the material around. For now there is enough supply to meet demand, he added.
Bird warns that shortages could increase as infrastructure projects ramp up. “Once HS2 gets going, there could be shortages because all the aggregates will go on that,” he said.
Meanwhile government legislation to decarbonise the economy and ban red diesel used on excavators and other plant and machinery will see the aggregates industry have to replace a huge proportion of its vehicles, according to Bird. “That means our prices are going to go up,” he says, possibly as much as 150 per cent.
A CLC report in April said plastic products were facing supply problems due to increased global demand and factory closures outside of the UK. Raw material shortages have also limited production of polyethylene and polypropylene plastics.
According to a report by Plastics Information Europe, plastic prices have shot up as stocks are depleted. For polyethylene, commonly used in pipe production, the organisation said “it was producers who dictated the prices, as many inventories were nearly empty”. Meanwhile, there is “no end in sight for the price rally” for polypropylene plastics, the report reads. Polypropylene is used to manufacture roof membranes, which the CLC added to its shortage list at the end of April.