Energy intensive products, such as steel and cement, have seen the biggest price rises. Timber prices, however, have now stabilised after their recent volatility.
These issues, and more, are addressed in the latest product availability statement from the Construction Leadership Council, which we reproduce here.
Statement from 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:
"In general, product availability is improving. Some products, including bricks, aircrete blocks, some roof tiles and semi-conductors, which are extensively used in building services products and gas boilers, remain on allocation or subject to longer lead times. Otherwise manufacturers are mostly keeping up with demand and, as stated in our last report, the market has become adept at managing supply with planned delivery times.
"Generally, demand is expected to remain positive into the second half of 2022, though some sectors such as private housing RM&I appear to be coming off their highest levels for certain products. Market participants suggest that a slight slowdown in demand may in fact serve to allow stocks to be rebuilt and improve availability.
"Average inflation for products and materials so far this year has been around 23%; with more significant price increases in energy intensive products such as insulation, cement, concrete and many steel products. Further price increases for those products are anticipated in the second half of the year owing to rising energy prices and input costs, and some have already been telegraphed to customers.
"Concerns have arisen that volatile inflation has led to the failure of relevant indices to reflect market reality. Some contractors are engaging in dialogue to use prime cost, provisional sums and target price-based contract mechanisms to mitigate the risks.
"Timber prices, however, have largely stabilised from the highs of last summer. This is largely due to easing demand and strong stocks of structural timber on the ground in the UK making supplies readily available for contractors and merchants. The price of structural timber in Europe and America remains firm to strong and, as a consequence, UK imports of structural timber are reducing. Some panel products have even seen reductions since the first quarter but structural Plywood prices remain firm. Birch Plywood and it potential substitutes have seen little or no availability due to Russian sanctions causing significant upwards price pressure for these products.
"Recruitment, retention and related wage inflation continue to present serious concerns across UK construction and may supplant product availability issues in 2023 among the key risks facing the industry. For example, there is clear evidence that skills shortages are making some SME builders reluctant to take on projects, as they don’t have the trades to complete the work."
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