Snapshot – Material Price Increases Update Q3 2021
Since our first newsletter was issued in July 2021, material prices increases have continued on an upward trend. While worldwide economies began to recover from Covid-19 and there is increased production of raw materials, it may be 2022 before we start to see material prices level out or decrease at a purchaser/ consumer level. Please find below a summary on the increases for each material.
Since January 2021, insulation has increased by 31%. In the first half of 2021 it increased by 15%, followed by a further 16% increase since our July newsletter. The main reason for the increase this year is the worldwide shortage of the chemical MDI, which is used in the production of PIR insulation. Not all insulations require this chemical. The haulage cost of materials due to lack of drivers is one of the main reasons for price increases, along with raw material price increases.
Drainage has increased by 30% since January 2021, 10% of which came during July to September. Why the increase? The European market for polymers has been under a lot of pressure for several months. The consequences of raw material shortages and price increases are significantly impacting the production of plastic products in the EU, which is resulting in very low stock of materials. The demand for polymers had increased in Europe in H2 2020 after a drop in production due to Covid-19, but while production began to increase, the supply of raw material did not grow accordingly.
Re-bar has increased by 34% since the start of 2021, or 10% since our last newsletter in July. Reinforcement bar costs still remain high with purchase costs between €930-€950/tonne for supply cost only. Steel scrap prices have begun to reduce, which should have a positive impact on the price of re-bar, but this remains to be seen.
Since January 2021, softwood timber has increased by 49%. In the first half of 2021 it increased by 27%, followed by a further 22% increase from July to September. Canada has started to export their timber into the US again which should ease the demand for EU product. Hopefully this should see prices level off in the next 3-4 months. It is not anticipated that we will see any reductions until mid Q1 2022, and there is still potential for prices to increase throughout 2021. In Ireland felling licences are still an ongoing issue, with approximately 6,000 licences now waiting to clear the appeals process. For more info on timber supply and prices click here.
Steel has increased by 52% since the start of the year, or 10% during the period July to September. Why is this? One of the main drivers for steel shortages was a shortage of domestic and imported steel products after demand started to recover. Market sources have said that non-European union suppliers preferred to divert materials to alternative markets, because growth in Europe was slower compared to other regions. For more info on steel supply and market news click here.