UK Construction Market Report 4Q 2024
Materials
Key statistics:
Impacts from conflicts
of respondents said they experienced impacts from conflicts on their projects in 3Q 2024.
Construction materials
change in the 'All work' Construction Materials Price Index between February 2020 and September 2024.
Fabricated structural steel
increase in fabricated structural steel prices since February 2020 (pre-pandemic).
The ‘All Work’ Construction Materials Price Index remains relatively stable, showing no change between January and September 2024, with the index reading 153.2 in both months.
Despite this stability, the index remains 38.0% higher than in February 2020, before the COVID-19 pandemic.
Whilst the index has decreased by 5.8% since its peak in July 2022, figure 53 shows that some materials have increased in the period, such as metal doors and windows, ready-mixed concrete and insulating materials. Notable reductions in the period include steel and wood.
In our 4Q 2024 survey, nearly one in five respondents (19%) reported that their projects were affected by conflicts, such as those in Ukraine and Gaza, during 3Q 2024, leading to extended lead-in times for some products and some price increases.
The latest Construction Leadership Council’s (CLC) Material Supply Chain Group statement highlighted that several products will see price increases ranging from 3 to 8% in January 2025, mainly stemming from higher energy costs. It also highlighted that some believe there will be further price increases in April due to higher employment costs from the effects of increases to National Insurance contributions, the National Minimum Wage, Business Property Relief and inheritance tax.
In its latest trading statement, Forterra says it anticipates “modest levels of cost inflation heading into 2025, with the recently announced increase in Employers’ National Insurance contributions adding to this.” It says it has secured approximately 80% of its energy requirements for 2025 and has “good levels of coverage for 2026 and 2027.” It has announced selling price increases in response to the cost base increases.
The CLC November 2024 statement also warned that a rapid surge in demand as the market strengthens could result in supply issues. Referencing the government’s housebuilding aspirations, it flags that in the 1970s — the last time the UK built 300,000 homes a year — brick manufacturing capacity was four billion; it is currently around two billion. It also highlights the global competition for structural timber, as much of the material used in the UK is imported from Europe.
Overall, most products have good availability. However, aerated blocks are on allocated supply and certain roof tile profiles are on extended delivery. As optimism for growth in 2025 increases, it is advisable to collaborate closely with the supply chain, as rising demand could lead to issues. Moreover, global tensions may continue to impact commodities and supply chains.
Concrete At COP29 in Baku, the Global Cement and Concrete Association (GCCA) urged stronger government policies to support cement industry decarbonisation. The GCCA’s Cement Industry Net Zero Progress Report 2024/25 highlights significant advancements since the launch of its 2050 roadmap, focusing on carbon capture technologies, alternative energy adoption and the use of sustainable materials.
GCCA leaders stressed the importance of collaboration, calling for updated building codes, carbon pricing and waste reuse policies to accelerate progress. The report features case studies showcasing initiatives like Heidelberg Materials’ carbon capture plant in Norway, solar energy adoption in Ireland and Bulgaria and zero-waste projects in Mexico and India.
Swiss-based carbon removal specialist Neustark is partnering with Aggregate Industries to establish its first UK site in Greenwich. Neustark’s technology captures carbon dioxide from biomass sites, liquefies it and injects it into mineral waste streams, such as demolished concrete. This process permanently stores carbon dioxide through mineralisation, turning demolished materials into carbonated, recycled building materials like concrete.
Neustark claims its method can store an average of 10kg of carbon dioxide per tonne of demolished concrete, turning it into a "carbon sink." The initiative supports a circular economy by reusing waste and aligns with net zero goals.
Recent research revealed a growing demand for lower emission construction materials. The study found that most companies are now prepared to pay a premium for lower emission steel and concrete, with 40% of respondents saying they would be willing to pay more for emissions reductions of 25% or higher for concrete, while 49% would be willing to do so for emissions reductions exceeding 50%. The survey, which involved more than 250 companies from 42 countries and 21 industries, also showed that 78% of respondents expect lower-emission steel and concrete to become standard materials for new products and projects within the next decade.
Steel Data from DBT/ONS shows a 134.2% increase for fabricated structural steel between February 2020 (pre-pandemic) and May 2022 (the peak), followed by large reductions. However, pricing remains 33.2% above pre-pandemic levels.
A recent MEPS International briefing explained UK steel pricing faces a complex outlook. The delayed rollout of the UK’s carbon border adjustment mechanism (CBAM) to 2027 raises concerns about exposure to carbon-intensive imports.
Increased public spending announced in the Autumn Budget may boost demand for steel products like hot rolled plates; however, domestic challenges, such as reduced automotive production and limited fabrication facilities, temper optimism.
While data centre construction offers some stability, high borrowing costs and subdued demand in 2024 weigh on sentiment. Falling interest rates could improve market conditions, but their impact has been slow to materialise.
Globally, steel companies are struggling with oversupply, which has depressed prices. Many are investing heavily to transition to cleaner production methods. Tata Steel closed its two blast furnaces in Port Talbot in September and will build a £1.25 billion electric arc furnace on the site by 2027. Although greener, the electric arc furnace is less labour-intensive, leading to significant job losses.
The owners of British Steel are to keep the blast furnaces at its Scunthorpe site running past Christmas amid discussions with the government over aid to support its plans to build an electric arc furnace at the site and another in Teesside.
If the Scunthorpe blast furnaces were to close, Britain would become the only G20 economy without the ability to produce steel from iron ore and coal. Critics have warned of potential risks to the UK’s economy and security due to the loss of primary steelmaking capabilities. However, the necessity of lowering emissions remains a driving factor. Notably, the Ministry of Defence was recently highlighted as importing eco-friendly steel rather than sourcing domestically.
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