Raw materials costs soar

The cost of copper and aluminium has almost doubled in recent times and the British Cables Association is warning of impending cable product price rises. “These increases have been happening over the last two years, but manufacturers have had to hold prices to stay competitive” says Peter Smeeth of the BCA.

“But costs have risen to such an extent that customers must now expect price rises.”

He also warns that shortages in raw materials, particularly copper, will only make price increases higher. The BCA believes that as the supply constraint grows this will eventually lead to a market shortage, probably resulting in product allocation and heightening the need for early ordering.

Alan Wilen, economics director at the Construction Products Association says provisional figures from its construction industry trade survey for the first quarter of 2005 reveals prices are up 5% on the same time last year. “Over the last year we have seen increases in manufacturing costs and the price of raw materials such as steel and oil. We are now seeing these fed through in manufacturer’s selling prices,” he says. While manufacturers had previously been able to curb price increases with improved productivity and efficiency, this no longer seems to be the case. “The big hike in raw material prices is swamping productivity gains elsewhere.”

The Building Cost Information Service has also put the 14.3 % increase in tender prices in the year to fourth quarter 2004, down partly to material price rises. Peter Rumble of BCIS says. “With materials prices rising by 7.3% in the year to fourth quarter 2004, largely due to the sharp increase in steel prices, and oil prices, the annual increase in tender prices does not appear to be that surprising.”