Why Is There a Building Material Shortage?
It’s no secret that the pandemic has taken its toll on a lot of industries, slowing them down. So far, the construction industry seems to have gone the other way. Where others have struggled with huge losses and massively disrupted supply chains, the construction market seems to follow an upward trend, mainly due to the high demand from both industrial and residential construction sectors.
The high demand is justified, as there is an uptick in real estate development in the U.S., with a focus on public infrastructure, such as healthcare clinics. There’s also an increased interest in housebuilding and renovation. This all sounds like great news; however, the increased demand is putting a lot of pressure on the building materials market, leading to major shortages.
What is causing the construction material shortage?
The scarcity of essential building supplies is not new. Nor is it simply caused by the current high demand. The COVID-19 pandemic has created a lot of logistical challenges through closed borders and lockdowns, causing significant gaps in the distribution of building materials.
The frequent shutdowns and restrictions implemented since the beginning of the pandemic halted the sourcing and processing of essential building supplies. On the other hand, imports have also been excruciatingly slow, affecting the global distribution of these much-needed materials.
Countries such as the UK and Germany have had a particularly hard time sourcing essential supplies such as timber and steel due in part to Brexit-related restrictions (for the UK) and labor shortages and shipping delays.
Most recently, the war in Ukraine is putting additional pressure on the construction industry by limiting access to building materials and, more importantly, pushing inflation to unprecedented highs.
According to a report on construction product availability, issued by the Construction Leadership Council (CLC):
“Prices for products and materials have increased by a reported 10-15% […] Specific products, especially timber, has seen increases of 20-50% for most products and over 100% for OSB and other sheet materials. For the first time we have had reports that some merchants are destocking certain products that are no longer economic.”
The rising inflation in turn deepens the supply chain gap, causing delays in both small- and large-scale construction projects and real estate development. It doesn’t help that big companies will often hoard materials, while small / independent contractors struggle to source the materials they need to complete projects.
Another ongoing operation that is contributing to material shortages is sustainable construction. While being a noble and environmentally friendly pursuit, sustainable construction is also draining timber supplies, since wood can be sustainably sourced and is a renewable natural resource. The bigger the demand for net-zero construction, the bigger the strain on timber.
What building materials are in short supply?
The building supplies shortages are affecting a wide range of materials, including but not limited to timber, steel, cement and concrete. The previously mentioned CLC availability report points out that:
“Demand for wood and wood products remains very strong and timber supply will continue to tighten into Q3 […] continuing the upward pressure on prices. […] Within infrastructure and commercial construction, steel and aluminum are both experiencing significant supply disruption and price inflation.”
Experts agree that the current material shortages will continue well into the rest of the year, as demand and inflation stay high, and the market continues its path to recovery from pandemic struggles.
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