Builders facing double-figure raw material price hikes
Suppliers warn customers of price increases ranging from 5% to as much as 20%
‘The increases are due to very severe supply shortages,’ says Martin Mackey, chief executive of the Hardware Assocation of Ireland
Builders face double-figure raw material price hikes as the industry gears up for full reopening next week.
Work on offices, hotels and other commercial projects is due to restart on May 4th, joining developments including private house building, which began this month.
However, builders suppliers are warning customers of price increases ranging from 5 per cent to as much as 20 per cent for timber, insulation, plastic piping, electrical goods and other key construction materials in recent weeks.
Worldwide and local shortages, Brexit, Covid and spikes in demand, as construction prepared to restart, have combined to force up prices, industry figures say.
One hardware business, based close to the Border, has received letters in recent weeks from nearly all suppliers of commonly-used materials saying they have to increase prices on most products.
Timber supplier Balcas warned that price rises would continue this year. Companies that supply materials made from plastics and synthetics also wrote saying they would increase prices.
Pipe maker Wavin, whose products are used across the construction industry, told the business it would be charging between 5 per cent and 12 per cent extra. Cork Plastics, which also supplies pipes, as well as PVC windows, said it was adding 8 per cent across the board.
The businessman partly blamed rising demand from people renovating and extending their homes, a result of continued Covid lockdowns, for the price hikes.
He also noted that bad weather in the southern US early this year had hit the oil industry, responsible for raw materials used in plastics manufacture.
‘Severe supply shortages’
However, he said that prices were rising across the board. “The increases are due to very severe supply shortages,” he said.
“Timber is the number one issue, but the bad weather in the US has affected plastics, polymers, PVC and so on.”
Mr Mackey said Covid-19 restrictions, Brexit and other issues were feeding into the problem.
He also pointed out that demand in the Republic was high on back of the need for new homes and a growing number of people who were renovating or extending their houses.
“Planning permission for extensions were up 45 per cent in the last quarter of 2020 on the last quarter in 2019,” he said.
Mr Mackey warned that the problem could worsen as US president Joe Biden’s $2 trillion recovery plan would increase demand for already scarce products.
A recent Construction Industry Federation survey found that almost one-third of builders are having difficulty getting timber supplies, while 21 per cent were encountering problems sourcing steel.
Members also reported problems obtaining PVC pipes, drainage fittings, electrical equipment, paints and fire-proofing materials.
Timber and steel
Two-thirds of them confirmed that timber was getting more expensive while more than 80 per cent noted that steel prices were going up.
Mr Mackey said that materials accounted for 13 per cent to 14 per cent of the cost of building a new house. He suggested that price increases could drive up the total construction bill by about 1 per cent.
However, he predicted obtaining materials would be the main problem that his members and builders would face in coming months. “Getting supply is the main issue right now,” Mr Mackey added.