Ukraine war affects construction
21 April 2022
In its update on product availability during April, the Construction Leadership Council (CLC) reports that the war in Ukraine is now beginning to be felt by the construction industry, but that supplies of most products and materials remains good across the UK.
John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, who are co-chairs of the CLC’s Product Availability working group, say that there are reports of nickel prices doubling since the conflict began, which affects the price of stainless steel. Russia was a major supplier before sanctions were introduced.
The prices of copper, steel, and aluminium have increased, and there are also shortages of microchips, semiconductors and of neon gas (major producers of which are in Odessa and Mariupol) used by lasers in silicon chip manufacture. Also, recent increases in the price of oil will likely affect both fuel and plastics.
In its availability statement last month, the CLC mentioned challenges in obtaining bricks, aircrete blocks, some roofing products, sanitary-ware imported from Asia and gas boilers.
However, the April report suggests that the biggest concern is the rate at which increased energy and raw material costs are driving up prices, particularly for steel, cement, glass and other energy-intensive products. The last three months, it says, have seen price inflation of 10-15%, on top of price increases introduced at the end of last year.
Looking at construction more generally, the report says that while the first quarter was busy for those completing existing projects, there were signs of a dip in demand in home improvement work in March compared to a considerable uplift at the same time last year.
It adds that as manufacturers reprice materials, some SME (small to medium enterprise) contractors continue to be required to sign up to fixed price contracts in advance of project delivery periods, resulting in considerable pressure mounting at delivery level.
● Given the abnormal increase in home and garden improvement following the initial Covid-19 lockdown, a correction was surely inevitable when restrictions were lifted. Factors like the UK conflict and the inflationary environment have compounded that.
Hirers and contractors will hope that the ongoing activity in house building, road maintenance, broadband installation and eco-friendly infrastructure will redress the balance.
