MARKET UPDATE: JULY 2021

Our industry continues to experience a volatile market, with further price increases in raw materials in H2 and no forecast for when it will stabilise. To help minimise this impact we are seeing our suppliers moving to more formal processes of structured allocations for products, extended leadtimes and forward planning of purchases for large scale projects. To help meet demand our suppliers are looking at increasing their production capabilities and frequency of communication so additional orders can be fulfilled. 

INTENSE DEMAND IS EXPECTED TO SLOW

The continuous increase in demand is expected to ease particularly as we have now reached the end of the Stamp Duty Holiday which may see the Housing Market slow. Contractors on site are also managing the shortages better by delaying some stages of the projects which suit both labour resource and material supply. As we come into the holiday season, we are also anticipating more of the UK workforce to take advantage of the easing of the COVID-19 restrictions to take well deserved breaks. 

TRANSPORT AND LABOUR

Since our last update in June, the construction industry is still facing labour and skills shortages in both the site and haulage sectors. This is having a continued effect on both the delivery of product and also the speed of job completions. All of which has been accelerated by COVID-19 (recent impacts of the isolation pingdemic) and Brexit. The Construction Leadership Council has requested that the Government exempts the sector where workers have been fully vaccinated. Skilled labour has been a traditional challenge and, while not providing an immediate solution, more employers are ramping up activity in their apprenticeship schemes to attract the next generation. In terms of drivers, the government has extended drivers working hours and transport companies are looking at creative methods such as utilising the retired workforce to help relieve the bottleneck.  

Within Travis Perkins Plc we are recruiting additional HGV drivers to help minimise the impact, we also have a Summer Casuals Programme where we will be welcoming some extra support within our branches, providing a helping hand - the programme provides a great opportunity for more young people to experience our business and the construction industry and will help to reduce labour shortages within our branches. 

KEY SUPPLIER UPDATES

Following our last update, a greater number of key product categories are being impacted by the lack of raw materials. Please see below for further information:

PRODUCT AREA	SUMMARY	SUPPLIER UPDATES
PLASTICS	Reduced supply of PVC resin continues to impact the capacity and availability of drainage pipe, chambers and certain ranges of duct. High demand in the Housing market, driver shortages and staff isolation incidents are also challenging service levels	Wavin - allocations in place for Ultrarib and Osmadrain pipe and couplings. Most ranges are extended by 1-2 weeks with longer lead times on chamber related products. Aquacell lead times up to 6 weeks due to high demand. Polypipe Building Products - all product ranges on a minimum lead time of 4 weeks. Polysewer and Chambers up to 8 weeks as production is rotated. Polypipe Civils - current delivery lead time is around 10 days and includes the option of Saturday deliveries. PVC ranges of Telecoms Duct, Class 1 and Land Drain are extended further.
STEEL	Steel prices continue to fluctuate causing pricing issues from suppliers	Our supplier ROM is now pricing on application due to the volatile market that steel is currently facing. ROM is also limiting supply due to demand and our order capacity is affected.
CONCRETE BLOCKS	Demand for blocks is up 40% on 2019 figures, causing suppliers huge demand & production issues. Suppliers are putting customers on allocation to help combat the issue.	Allocation on all blocks due to limited supply and production issues, in some cases not accepting any more orders due to backlog. Tarmac has stopped product on foundation blocks after major customers ask to focus on above ground.
CEMENT	Allocation continues to be a challenge and due to issues with Paper bags and Haulage the allocation has a reduction by 40% for W/C 26/7 and a 20% reduction w/c 02/08	The constant battle to keep Cement production at capacity has resulted in breakdowns in machinery and other issues outside the control of Hanson, as such further restrictions have been applied on a short term measure.
INSULATION	Insulation continues to be on allocation and will do for the foreseeable future.	Keyline to receive only a limited amount of Insulation product per week from Celotex due to production and demand issues.
HAULIER ISSUES	Delivery delays due to haulier issues. More and more suppliers are continuing to reference this as potentially one of the biggest issues we are facing. Most of the merchants and suppliers in our industry are currently advertising driver vacancies but with competition and high demand from the hospitality/retail sectors following the lifting of restrictions.	Supplier Alumasc Water Management Solutions have advised that they have delivery delays due to their haulier providers - click here to read their statement. Saint Gobain PAM highlighted the challenges with the Haulage industries but are confident in their fleet investment and partnership with XPO Logistics - click here to read more.

 

Price increases will continue to be an ongoing issue throughout the year, these are published on our website here and will continue to be updated when any new increases are applied. 

Please continue to follow our social media platforms to see our latest promotions, with the current one being with Wavin on their clay drainage as an alternative solution to the plastic product shortages, with their Hepworth Clay Drainage readily available in all Keyline Civils Specialist branches (click here for more details). 

Finally, we thank our customers for their continued support and understanding at this challenging time. We ask that you work with us as closely as possible to identify the best possible solutions and minimise impact wherever possible. - please speak to your local branch or sales contact who will be able to further support you.