Price Pressure Mounts with Roofing Supplies Still Blocked

CERTAIN ROOFING materials are still in short supply with mounting price pressure, while most construction products and materials are available with a good supply across the UK, according to the latest Statement from the Construction Leadership Council’s Product Availability working group.

The picture also remains challenging for bricks, aircrete blocks, some sanitary ware imported from Asia and gas boilers, all of which are experiencing longer lead times.

Ukrainian War Impact

The impact of the war in Ukraine is only beginning to be felt by UK construction. There are reports of nickel prices doubling since the conflict began (Russia was a major supplier before sanctions hit), which affects the price of stainless steel. The prices of copper, steel, and aluminium have increased.

Taken together with a shortage of supply from major neon producers in Odessa and Mariupol, and existing Covid-related bottlenecks for microchips and semiconductors from Asia, the electrotechnical sector is now experiencing inflation on products above 20% as well as price rises between 10-20%. Recent increases in the price of oil will likely affect both fuel and plastics.

Timber

There are no issues expected for structural timber, however, birch plywood (widely used as a finishing product) and Russian redwood (a predominant source for mouldings) will be affected.

Material Costs

Otherwise, the biggest concern is the rate at which increased energy and raw material costs are driving up prices, particularly for steel, cement, glass and other energy-intensive products. The last three months have seen price inflation of 10-15%, on top of price increases introduced at the end of last year.

While this is challenging for UK construction firms, the impact is greatest for small and medium sized enterprises (SME), which account for most of the industry’s businesses and nearly all of the builders and contractors. While the first quarter was busy for those completing existing projects, there were signs of a dip in demand in home improvement work in March compared to a considerable uplift at the same time last year.

Price Pressure

Without price continuity, it is harder for trades to quote for projects on fixed price contracts, and then seek to pass onto their customers any price increases for materials that would otherwise erode their profit margin.

Furthermore, as manufacturers re-price materials and SME contractors continue to be required to sign up to fixed price contracts in advance of project delivery periods, considerable pressure is mounting on SMEs at delivery level.

Discussions are taking place within CLC to identify ways and means to manage and mitigate price inflation.

“We will only achieve a solution that works for industry and clients if everyone collaborates and shares responsibility,” says the Working Group statement.

The Statement was prepared by John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group.

>>Read more about material shortages in the news.