Materials woes not over despite easing pressure, CLC warns

Material shortages and price hikes are not over despite improved conditions, the Construction Leadership Council has warned.

In their latest product availability update, John Newcomb, chief executive of the Builders Merchants Federation and Peter Caplehorn, chief executive of the Construction Products Association, said the situation had got better as winter wore on.

The update said: “Going into the new year there are relatively good stocks and availability of most products, including timber where prices have also fallen from their peak.”

But it added: “As reported in previous statements, supply challenges continue to affect bricks and aircrete blocks, roof tiles, steel lintels, manhole covers, plastic drainage products and certain sealants, coatings and paints.”

The update said strong demand meant that a shortfall in the domestic production of bricks, which is already at full capacity, will continue this year.

It will remain so until three new UK brickmaking plants come on stream in 2023 and 2024, boosting UK annual capacity by about 150m bricks a year. Imports, they added, will be continue to be required to meet current demand.

Energy costs and price inflation also remain a cause of concern, the pair said, with the latest forecasts anticipating price inflation from 7% to 10% or more this year.

The update also said that a shortage of semi-conductors was constraining the availability of boilers at a time when demand is exceptionally high.

Semi-conductors are important components for many advanced construction products including lighting and fire protection systems, kitchen white goods and air-source heat pumps.

The update also confirmed that delays and volatile prices for global shipping looked set to continue at least until quarter three.

It said this was exacerbated by China being home to seven of the top 10 container ports, which have ‘zero covid’ policies in place, leading to shutdowns and delays that have worsened global bottlenecks.

It added that with the Beijing Winter Olympics taking place next month, factories will be closed in 64 northern Chinese cities to improve air quality, saying this would almost certainly affect the production of some construction products.

The update said the impact of Omicron has been limited and was unlikely to cause disruption at current levels.

The pair also said raw material supply for plastic products had stabilised over the last quarter, leading to improvement in product supply although backlogs were unlikely to be cleared until quarter two.

The issues previously affecting timber and cement availability have also eased but longer lead times may return as the volume of demand increases later in the year.

Yesterday, builders merchant Brickability and products firm Marshalls both said full year earnings would be ahead of expectations thanks to booming demand with Marshalls saying revenue of £589m in 2021 will be 9% ahead of its 2019 income when it publishes its annual results in March. Brickability’s financial year runs until the end of March.