Wood and steel prices continued to fall in the first quarter of 2023, while the cost of cement and concrete rose, according to new data.
A report into commodities prices released today by construction consultant Linesight said that materials requiring high energy input into manufacturing were suffering ongoing affordability challenges.
In addition to the rises affecting cement and concrete, brick prices rose 8 per cent between December and March, despite falling demand, the report found.
Linesight UK managing director Michael Riordan said: “We are seeing an overall stabilisation of commodities from the extreme levels experienced last year, which is welcome news.
“However, as we can see from this quarter, we are still dealing with a volatile market, sensitive to the geopolitical environment, elevated energy costs and demand-supply impacts.”
Riordan added that falling prices of some commodities was being offset by demand spikes from sectors such as data centres and life sciences, along with the impact of China’s relaxation of it’s zero-Covid policy.
In January, steel rebar prices continued the sharp falls seen during the second half of last year, before edging up in February and March. However, Linesight predicted that “there will be a general downward trend over the rest of the year as demand weakens”.
Lumber prices dropped by 22 per cent between June 2022 and January 2023, but remained around 27 per cent higher than the 2018-20 average. Lumber prices also fell a further 8.5 per cent from the first quarter of 2023 to the second quarter of 2023.
During the first quarter, copper prices continued a rise that began in July 2022, although prices have levelled off more recently, according to Linesight.
In addition to the easing of inflationary pressures in some parts of the materials market, Linesight said that supply chain challenges were showing some signs of improvement.
But it added that skills shortages and ongoing supply chain pressures “will likely limit significant reductions in construction costs as the year progresses.”
On tender prices, Linesight predicted an increase of 3.5 per cent in 2023, 3 per cent in 2024 and 2025, and a further 4 per cent jump in 2026.
“Elevated construction costs and interest rates will likely cause a modest decline in construction output,” it concluded.
Last week, a joint statement from John Newcomb, chief executive of the Builders Merchants Federation, and Peter Caplehorn, chief executive of the Construction Products Association, who are the co-chairs of the Construction Leadership Council’s Product Availability working group, said: “With demand lower than at this time last year, there is less pressure on prices.
“As a result, early indications suggest prices for many products appear to be stabilising and in isolated cases even declining from recent highs, though volatility persists.”
The statement added that there was “good availability” of the vast majority of buildings materials across the UK.
While some issues continue to dog products that are reliant on semi-conductors, reports indicate that most materials are back to availability levels last seen pre-Covid.
Linesight Commodity Price Report – Q1 2023
|Q2 2023 (f)||Q2 2022 – Q2 2023 (f)||Q4 2022 – Q1 2023 (e)|
|Materials||£||£||% change||% change|
|f: forecast. e: estimated|