AWMS comment: Q4 2016

Steve Durdant-Hollamby, Managing Director Alumasc Water Management Solutions (AWMS) is BMBI’s Expert for Civils, Metal Rainwater & Drainage.

The rainwater and drainage market got off to a slow start in 2017, although merchants continue to report growth in RMI and a positive start to the New Year. Specification and commercial projects have been delayed by cold weather, particularly for civils, and a lack of skilled labour. Government’s investment in infrastructure will boost manufacturer volumes on large scale projects, but we need a strong commitment to develop our skilled workforce for the supply chain to reap the full benefits.

The effects of fluctuating exchange rates and consecutive months of price increases in the last quarter of 2016 are now beginning to be felt. There is still a high degree of uncertainty in the market and it’s difficult to forecast confidently with Article 50 and the outcomes of European elections hanging over the UK.

Price increases are particularly significant in the steel market, with rises of over 60%. Manufacturers are unable to pass all this on to customers, so margins are being squeezed.

The spectre of anti-dumping is now a serious issue that will add more pressure on British manufacturers if the European Commission approves a protectionist tariff on foreign imports that it believes are priced below fair market value. A group of European manufacturers is pursuing an opportunistic anti-dumping claim against UK manufacturers importing from foundries in China or India. If approved, there is a risk of a levy of 20% or more being imposed on all imported products. It’s a frustrating process, with European manufacturers resurrecting a claim investigated only a few years ago. All the foundries in question were cleared, but despite this, they will be put under investigation again.

On the upside, exports are strong, there is a trend to specification of steel rainwater as housebuilders switch from plastic to something more robust and sleek looking, and the Government’s new Housing white paper will give a welcome boost to the housing market and construction industry overall. More homes will generate demand for innovative rainwater and drainage solutions.

We’re in for an interesting and perhaps bumpy year, but overall we expect sales and the market to have evened out towards the end of 2017.

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