There is a huge demand for timber and timber products right now.
Timber is also seen as the ‘go-to’ material to ensure projects are sustainable. The demand for sustainable building development will become greater.
Some experts state it is simply the huge demand that is causing the problem as stated in the comment below:
TTF chief executive David Hopkins
“In our view, the market position should be phrased as a DEMAND rather than as a supply situation. Timber is still being imported and produced at high volumes.”
Due to short supply, lead times for concrete tiles have tripled to three months, according to the National Federation of Roofing Contractors.
Coatings & Paint Products
Supplies to the UK are restricted due to a global shortage and the cost of shipping containers.
This affects both industrial and decorative coatings. This shortage appears to be both acute and far-reaching as illustrated by Tom Bowtell CEO of BCF (British Coatings Federation) below:
“About 85% of our raw materials have been greatly affected: resin, monomers, pigments, and additives. There are not any raw materials that are not affected.”
There has been a shortage of insulation products for some time particularly PIR and wool fibre products, but this situation appears to be easing.
As demand increases, prices are rising for raw steel throughout the EU.
This has created a backlog in production and shortage of supply.
In addition, the steelmaking industry is under pressure to reduce its Carbon emissions and has come in for heavy criticism from supporters of climate change.
Cement shortages are being experienced across the board.
This applies to both bagged cement and the bulk cement market which accounts for roughly 80% of total cement production.
Again many production facilities were closed during the pandemic and routine maintenance procedures were postponed.
This coincided with increased worldwide demand.
Mitigation – Consequences – Future Market Prices
Travis Perkins has reported the following price increases:
Bagged cement will rise by 15%.
Chipboard by 10%.
Paint by 5%.
A Travis Perkins spokesperson commented:
“In instances where we have seen some challenges posed by global demand for raw materials or inflationary pressures, we continue to work closely with our suppliers and partners to minimise price increases where possible, whilst also ensuring healthy stock availability for all of our customers.”
It seems the hardest hits will be to small building firms and DIY enthusiasts.
Larger construction companies can place orders months in advance which should be unaffected.
This is borne out in the following statement by 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:
“There is evidence that those who can buy in advance and large quantities are having fewer problems at present than SME builders who are used to buying the products they need that day from their local merchant.”
Nevertheless, the shortage and demand-supply in the market could cause project delays and increased costs. This is worth bearing in mind when looking at contract terms and framework agreements.
In summary, as always in these situations, someone has to pay.
Accurate information for forward pricing for future projects and tender applications is now more crucial than ever.
We are monitoring the price–demand situation closely and will report back on this topic in a coming newsletter.