Cost of raw materials set to come down next year
Having recently seen the first drop in raw materials costs since September 2020, experts at one of the UK’s largest online metal suppliers are offering their predictions for the industry in 2024.
2023 saw the first signs of a fall in the cost of metals. A decrease in demand has seen the forecasted price deflation come to fruition, meanwhile, the ongoing unsteady economic situation in the UK has solidified this.
Paul McFadyen, Chairman at metals4U, has provided his commentary on each of the predictions for 2024 and how he sees them affecting those within the industry next year.
- Raw materials to go down in price
With supply chain disruptions and increased demand hitting the industry after the pandemic, a steadier supply of raw materials should now start to consistently drive prices down.
“We’ve already seen green shoots in the cost of materials. The period between June and August 2023 saw an average drop of 1.6% in the cost of raw materials compared to the previous year, and this trend looks likely to continue into 2024. Prior to this drop in June, it had been 21 months, in September 2020, when prices last dropped across the board.”
- The skills gap will only worsen
The government has promised to invest in major construction developments by 2027, but the Construction Industry Training Board estimates that an additional 225,000 workers will be needed by this time.
“There are genuine concerns about the future of the workforce when it comes to tradespeople and those within construction. Despite some real positives in government-supported developments, not enough young people are seeing construction trades as a career. Additionally, the fact that one-third of the current trade workforce is over 50 and expected to retire within the next ten years, there won’t be enough staff to meet the need.”
- The north is set to prosper
In 2024 and 2025, construction markets in the north of England look set to outperform London and the south. This is all as a result of the government Levelling Up Fund, with £2.3 billion being shared amongst schemes in the second round of investment.
“As a northern company, it’s great to see the potential, for the north of England, to really benefit from Levelling Up. There are some very exciting projects lined up, including Eden Project North in Morecambe, a new AI campus in Blackpool and regeneration in Gateshead, amongst others. Altogether, this signals a promising boom for northern construction.”
- Residential construction to slow, industrial to speed up
The housing market is in a difficult position and housing prices are dropping, meaning workload in the residential sector is suffering. However, changes to the National Planning Policy Framework could see volume housebuilders hit the hardest. This means that the supply of development land for residential homeownership could be reduced over the medium term. However, reform of property regulations and improved post-Grenfell safety may increase the appetite for build-to-rent developers for city centre high-rises.
“A general slowdown of the housing market, affected by high interest rates and new planning rules, has naturally reduced the demand for out-of-town developments. This means that industrial construction, such as that supported by the Levelling Up Fund, and city centre developments could thrive.”