Volatile energy prices set to disrupt winter product supply, says CLC

The CLC has raised concerns about the supply of energy-intensive products in the coming winter citing reports of day-to-day fluctuations of up to 300% for energy costs.

According to the group, the extreme price volatility is likely to affect the financial viability of some manufacturing, though many UK firms are purchasing energy on forward contracts to manage risk.

There are particular concerns over the availability and cost of imported glass later in the year, with European plants anticipating reduced production.

On top of this, the CLC reported that stubbornly high container costs and reduced capacity on shipping routes has been affecting the supply and price of other imported goods, with just 25% of goods from East Asia arriving on time.

Despite these warnings, the group’s product availability statement was broadly positive concerning inflation, stating that the high levels exacerbated by the war in Ukraine had stabilised.

“Softening demand, particularly at the retail end of the market, has led price inflation to moderate for some products, although this is unlikely to result in lower project costs in the short term,” said John Newcomb, chief executive of the Builders Merchants Federation, and Peter Caplehorn, executive of the Construction Products Association.

“The general view is that inflation will persist at a lower level across most product categories for the rest of the year,” they added.

Newcomb and Caplehorn, who co-chair the CLC’s product availability working group, said general product availability was improving across the UK – with the exception of Northern Ireland, where separate issues are affecting the transport of goods.

Supplies of aircrete blocks and bricks have improved due to a fall in demand, although the pair said summer maintenance programmes could reverse this trend temporarily, while structural softwood, carcassing and fencing are in good stock and price have reduced slightly. Sanctions on Russian logs mean they will likely remain near current levels.

Demand remains high for gas boilers, with lead times expected into Q1 2023, while solar PV and other renewable energy products, as well as specialist lighting products, also have extended delivery times currently.

The CLC has received initial reports of a shortage of barrier pipe, due to low stocks of a key manufacturing additive supplied from the USA – this product is used for all heating systems and hot and cold water supply.