Ibstock comment: Q2 2017

Tony France, Sales Director Ibstock, is BMBI’s Expert for Bricks

Builders Merchants continue to replenish brick stock levels after a year of de-stocking, particularly during the first half of 2016, and merchants’ sales remain strong.

At the same time, housebuilders continue to increase their build programmes in response to the ongoing demand created by low unemployment, low mortgage interest rates, a chronic shortage of homes and particularly, the continuing influence of the governments Help-to Buy Equity Loan scheme, which has been used in over 120,000 newly built home transactions since its introduction in 2013. With the government committed to this scheme until 2021, the pace of new home building appears set to continue for the foreseeable future.

With clay brick the most popular choice by far for constructing new homes, brick demand should also be strong over the coming years. Indeed, recent evidence suggests brick sales are showing signs of returning to pre-financial crisis levels.

Following March 2017, during which we experienced the highest single brick industry despatch volume in any month in nine years, May and June exceeded that with the highest monthly despatch level since September 2007, before the credit-crunch. In the 6 months to the end of June 2017, overall brick industry despatches were 15% ahead of the same period last year. However this is against a very soft 2016. These figures exclude imported bricks, which are also rising to meet the demand.

With the increase in brick demand, comes the concern for longer lead times, and there is already evidence of this at certain factories, particularly for soft mud products. In response, brick manufacturers are increasing production levels at in-demand factories wherever possible. There are still stocks of bricks readily available for customers at many factories and manufacturers continue to look for opportunities to develop their plants to increase capacity.

Once fully commissioned, Ibstock’s new soft mud brick factory in Leicestershire will commence production in the final quarter of 2017, producing up to 100 million bricks a year.

It is vitally important that builders’ merchants work closely with their builder customers to plan their direct-to-site brick needs as early as possible. I’d also continue to advise builders’ merchants to consider their ongoing depot stock requirements and place accurate schedules for key products for the remainder of the year.

See the full Q2 Report here: https://www.bmbi.co.uk/the-index/ 

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