Materials

Recently, the ‘All Work’ Construction Materials Price Index has shown increased stability. The May update reveals a slight monthly increase but a 2.0% decrease compared to the same period last year.

Although the escalation in material costs has stabilised, the index remains 39.5% higher than in February 2020, prior to the pandemic.

Despite the index peaking in July 2022, the costs of some products have continued to rise, whilst notable reductions have been observed in fabricated structural steel reinforcement and timber.

Overall, price increases are now more predictable and less volatile, with most products and materials readily available.

In our 3Q 2024 survey, nearly one in five respondents (16%) reported that their projects were affected by conflicts, such as those in Ukraine, Gaza and the Houthi Red Sea attacks, during 2Q 2024, leading to extended lead-in times for some products.

The Construction Leadership Council's (CLC) Material Supply Chain Group reported good levels of product availability as the summer holiday period began, citing subdued demand across most sectors. It commented that it is "difficult to see the market improving before the turn of the year, and suppliers have adjusted capacity to meet current demand."

Brickmaker Forterra agreed, observing little evidence of a sustained recovery in the near term, despite modest signs of improving demand in recent months. The company reported a revenue decline of more than 10% in the first half of 2024 due to worsening market conditions.

The CLC warned about suppliers' ability to rapidly increase output to meet a surge in demand when the market improves. The key to addressing this challenge lies in accurate forward forecasts and extended lead times for orders. It emphasised that manufacturers can scale up production within two to three months but require advance notice of orders to achieve this.