Construction demand for mineral products shows resilience but challenges lie ahead, survey reveals

The latest survey from the Mineral Products Association (MPA) reports that UK construction’s demand for big-volume mineral products like aggregates and concrete showed resilience in the first quarter of 2021, despite renewed lockdown restrictions, Brexit and particularly wet winter weather, but warns that an encouraging start to the year should not distract from real challenges that lie ahead.

MPA says the recovery in construction must not be taken for granted because so much depends on the Government’s policy stimuli in housing and its delivery of the UK’s planned infrastructure programme. The Office for National Statistics (ONS) data shows that construction output has flatlined since September, while new contract awards have been weak for most of the past year.

While broadly positive, trends in sales volumes for essential mineral products show mixed results for heavy-side building materials such as aggregates, ready-mixed concrete, asphalt and mortar.

These core products are mostly used in the early stages of construction — for example foundations and structures — so their sales provide a unique barometer for the start of new projects rather than the completion of finished ones.

 In the latest MPA survey, building materials manufacturers who between them supply around 1 million tonnes of mineral products every day reported a slow but steady start to the year, with construction demand in March much stronger than in January.

Sales volumes for primary aggregates and ready-mixed concrete increased by 3.4% and 1.6% respectively in the first quarter of 2021 compared to the last quarter of 2020, but both asphalt and mortar sales volumes declined over the quarter, down 4.9% and 7.4% respectively.

Robust housing activity, particularly in landscaping and home improvement, and an acceleration in infrastructure work driven by Highway England’s roads programme and HS2, were tempered by a combination of factors, including supply chain disruptions, rising Covid-19 infections and a particularly wet winter affecting work on site.

Aurelie Delannoy, Director of Economics Affairs at the MPA, says that a balanced perspective is required. 'Mineral products manufacturers are busy supplying post- lockdown pent-up demand, particularly for domestic activity such as landscaping, repair and maintenance, and home improvements, as well as infrastructure projects already in the pipeline, including momentum building on HS2.

'The outlook for this year and next is also positive, but the stakes are high. Any optimism assumes activity is not disrupted by renewed outbreaks of Covid-19, and most importantly, relies on the Government delivering on its planned infrastructure commitments. MPA members tell us they are yet to see a more clear-cut pick-up in new housebuilding, whilst any recovery in commercial development is expected to remain muted given the current reticence for major new investments.'