07 JUL 2021 BY JOSHUA STEIN
Prices of key materials including timber and steel are continuing to rise, new data from the government has confirmed.
Timber prices, which have been rising steadily since May 2020, were up again in May of this year, according to the latest statistics produced by the Department for Business, Energy and Industrial Strategy (BEIS). The price of sawn or planed wood went up by 3 per cent between April and May, with imported plywood prices rising 4 per cent after they leapt by more than 12 per cent the prior month. Imported plywood was 29.8 per cent more expensive in May than it was a year ago.
The price of fabricated steel jumped 5.9 per cent in May and overall was up more than 38 per cent, year-on year. The price of concrete rebar is up almost 43 per cent on what it was a year ago.
Cost inflation for aggregates and cement levelled off in May, after months of increasing prices.
Overall material costs were 10.2 per cent higher in May 2021 than they were 12 months prior. (Materials Shortage)
Civil Engineering Contractors Association (CECA) chief executive Alasdair Reisner said the price increases are creating challenges for businesses across the supply chain, which could be exacerbated if there are not contractual mechanisms written in to recover cost inflation.
“We would encourage all parties to work collaboratively to better understand forward demand, and to mitigate the impacts of rising prices to ensure that this does not lead to extreme pressure on suppliers,” he said. “Organisations may also wish to look at the inclusion and/or use of price adjustment clauses to better manage the issue.”
Electrical Contractors Association (ECA) director of legal and business Rob Driscoll said this was not a short-term problem, and that contracts being signed now for delivery in the next year will also face challenges sourcing materials: “Inflation in the wider economy might be low, but right now – and at least for the remainder of the year – the supply chain is likely to be challenged by the demand for fixed-risk/price in what is still a highly volatile market,” he said.
Mineral Products Association (MPA) chief executive Nigel Jackson told Construction News last month that some materials shortages should be resolved this summer for items produced in the UK. But he warned that steel and timber shortages and inflation could last for longer, as much of this is imported and supplies to the UK are affected by international demand and shipping costs. (Materials Shortage)
In a trading update released today, Vistry said an increase in construction activity had led to pressure on the supply chain, leading to extended lead times for materials and inflated prices. The company said it had so far managed the situation by working with its suppliers and that house price inflation was outstripping cost material cost increases.
The Construction Leadership Council (CLC) warned last month that the materials shortages are set to continue well into the second half of 2021. Timber, roof tiles and bagged cement head the list of materials in short supply.
The latest Purchasing Managers’ Index (PMI), published yesterday, revealed a record increase in construction activity in June, which has put extra strain on materials availability and pushed up prices. (Materials Shortage)