Andrew Simpson, Packed Products Director Hanson Cement is BMBI’s Expert for Cement & Aggregates.
Strong demand from all market sectors – from home improvements right through to new build and infrastructure – is continuing to drive cement and aggregate sales growth in Q2. We don’t expect any let up until Q1 2022 at least.
According to the Mineral Products Association (MPA), construction demand for mineral products rose sharply in Q2 with mortar sales rising at the fastest rate, up 21.2% on Q1. Asphalt volumes rose 4.5% to over 6 million tonnes – the second highest sales quarter since 2008. Demand for ready-mixed concrete also continued to recover, although volumes are behind 2019 averages.
Cement manufacturers have been producing as much product as in previous years, but bulk and bagged cement and some aggregates have been on allocation throughout Q2. This has ensured that available products are distributed fairly and equitably to customers, and added stability to the supply chain. Demand continues to outstrip supply, so there is significant pressure on suppliers. If forecasts hold true, we could be looking at a pinch in cement and aggregate supplies for the next three to four years.
Shortages of materials such as steel and timber makes things worse. We’ll still be feeling the ripples of these shortages in six months as starts and completions of civils and groundwork projects are affected. Shortages should ease over the summer for products made in Britain. However, the MPA warns that for imported products like steel and timber, disruption and price inflation could last much longer as they effect the availability of packaging and pallets.
As a nation, we are too reliant on imports. With freight costs continuing to spiral, we need a stronger UK manufacturing base to gain control of the supply chain. That said, moving goods within the UK is also difficult as the availability of hauliers has become a national problem. We’ve lost 15,000 European drivers due to Brexit and 30,000 drivers due to Covid tests, which has intensified the shortages. It’s a perfect storm of delays impacting projects that add significant unbudgeted costs as prices rise with extreme demand.
With construction’s need for haulage and drivers pitted against record demand from supermarkets and online giants like Amazon who can pay more to maintain their supplies, it’s a struggle to compete. Manufacturers and suppliers are at the mercy of hauliers, and the Government must intervene to help end the disruption.