In the realm of construction, where the balance of supply and demand precariously hinges on global stability, the Construction Leadership Council (CLC) has shed light on the current state of material prices. With the year 2024 unfolding, the construction industry witnesses a period of relative calm in material pricing, buoyed by good product availability and a downturn in construction workloads, particularly impacting the housebuilding sector. However, looming shadows cast by crises in the Middle East present potential threats to this stability, signaling potential inflation in key construction materials.
The CLC's Material Supply Chain Group, in its latest discourse, acknowledges the sustained equilibrium in material costs, attributing it to a decrease in construction activities that has alleviated pressure on material supplies. This respite, however, is threatened by geopolitical tensions in the Red Sea region, where Houthi rebels' disruptions have yet to significantly impact product prices but have already introduced delays in shipments from Asia. Products such as decorative sandstone, plywood, sheet materials, and electrical goods face shipping delays of 10-15 days, with a looming specter of five-fold price increases due to escalated shipping and container costs.
Further complicating the landscape, the ongoing conflict between Israel and Gaza poses additional risks, particularly to the supply and pricing of semiconductors—a market already under strain since 2020. Israel's pivotal role as a major semiconductor exporter, with four significant design and manufacturing facilities, underscores the potential ripple effects of these tensions on global supply chains.
Despite these challenges, the CLC report offers a silver lining with the assurance of good availability of aggregates, cement, concrete, and a plentiful supply of steel. However, it notes the financial strain on the steel supply chain, attributed to reduced demand, and anticipates no significant increase in output from large housebuilders in the latter half of 2024. Moreover, regional medium-sized housebuilders are grappling with the scarcity of small sites, further dampening expectations for a rebound in demand for aggregates and steel until at least 2025.
Amidst these developments, the CLC raises concerns over increasing instances of late payment for materials across various regions, alongside growing difficulties in obtaining trade credit. This situation is exacerbated by insurers' heightened apprehensions over construction insolvencies, leading to more expensive and restrictive coverage.
In light of these challenges, the co-chairs of the Material Supply Chain Group—John Newcomb and Peter Caplehorn—are poised to engage with the Association of British Insurers to address these critical issues.
As the construction industry navigates through these turbulent waters, the role of platforms like Find A Start becomes ever more crucial. By connecting contractors with skilled tradespeople, Find A Start facilitates the swift assembly of capable teams to tackle projects efficiently, regardless of the fluctuating material costs and availability. Our platform is dedicated to simplifying the process for contractors to find the right tradespeople and for tradespeople to find steady work, thereby contributing to the resilience of the construction industry amid these uncertain times.
For more information on how Find A Start can support your construction projects during these challenging times, visit our website at www.findastart.co.uk.