Q4 finished on a high, wrapping up a positive year for volume sales in the cement and aggregates industry.
We’d normally expect to see a drop in demand for our products over winter, but this year bulk cement and aggregate sales remained buoyant in Q4. Bagged cement sales to merchants performed as expected.
Figures from the Mineral Products Association (MPA) showed that construction demand for mineral products remained strong in Q4 across the board, despite uncertainty caused by the Omicron variant. Ready-mixed concrete was up 5.9% compared to Q3, while asphalt (-0.3%) and mortar sales (-0.7%) were only marginally down. With a robust pipeline of new work being reported, strong growth could easily be sustained into 2022 and 2023.
Sales are high, but so too are our costs. Carbon and energy prices are the highest they’ve ever been, and they are still rising. At the time of writing, carbon credits are over £85 a tonne – a year ago they were £35.
To add to industry’s cost pressures, April 2022 will see a ban on the use of red diesel on construction sites, and a new plastic packaging tax. We have already invested in new Tough Bags for our bagged cement products, which are predominantly paper but have a small plastic element, to reduce our plastic use. Demand for plastic packaging with recycled content is increasing, which put pressure on its supply chain.
Supply chain issues eased considerably in Q4, but beware – the issues are far from resolved, they are just less prevalent. When product demand returns to normal around March, don’t be surprised to see the return of pinch points, such as driver and haulage shortages. We are urging merchants to keep stock levels high, so they don’t get caught out later down the line by the same supply chain disruptions we saw throughout 2021.
If the pandemic has taught us anything, it’s to expect the unexpected and plan for the worst. We are better prepared for 2022 than we were for 2021, and we are now quicker to react and ready for whatever the year has in store.