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Sales volumes for ready-mixed concrete in Great Britain rose by 9.8% in the first quarter of 2023 compared to the previous three months.
Mortar sales were up by 6.0%, primary aggregates (crushed rock, sand & gravel) by 3.3% and asphalt by 1.8%.
This comes after a near year-long decline in demand for these materials, according to the Mineral Products Association (MPA) industry sales survey.
This MPA survey is seen as an indicator of construction trends, reporting on market activity in heavy-side building materials – materials that tend to be used at the beginning of a construction project and hence at the front end of the economic cycle.
The latest results indicate that the downturn may have bottomed out, although weaknesses still remain.
Asphalt producers, for instance, have highlighted the difficulties that local authorities face in trying to reconcile rising costs with fixed budgets, forcing them to scale back road improvement and maintenance plans. Major road projects overseen by National Highways are also heavily impacted by inflation, planning delays and changes in government priorities. As a result, the 5.2 million tonnes of asphalt sold in the first quarter of 2023 is well below the 5.6 million tonnes average in the first quarters of 2021 and 2022. Sales volumes for asphalt have fallen by 4.9% in the past six months alone, with reductions widespread across most regions of Great Britain.
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House-building is another area of concern highlighted, the MPA says. Mortar sales volumes, which are primarily linked to the early stages of new housing projects, saw a 6% rebound in the first quarter of 2023. Some of this includes a catch-up from December, when weather disruptions brought sites to an early pause before Christmas. However, Q1 2023 was still the second-worst performing quarter of the past two years, with volumes down 8.7% over the past six months. Housing demand cooled in the wake of the Truss/Kwarteng mini-Budget of September 2022, with interest rates rising sharply and house-buyers disappearing. The latest mortar data suggests that housing output will slow further over the next few months, evidencing housebuilders’ continuing focus on finishing existing builds, rather than starting new ones.
Meanwhile, progress on major infrastructure projects – including HS2, Hinkley Point C and work in the regulated sectors – continues to underpin demand for bulk aggregates as well as supporting sales of ready-mixed concrete. The forward pipeline includes a variety of opportunities for the mineral products industry, but there are also significant risks to deliverability, given the costs challenges that remain for infrastructure projects. Chancellor Jeremy Hunt’s decision in the March budget to freeze public spending capital budgets in cash terms raises concerns that there may be further cuts to the pipeline ahead, the MPA said.
MPA director of economic affairs Aurelie Delannoy said: “Producers of mineral products continue to face the immensely difficult task of balancing the short-term and long-term outlooks – managing costs, subdued demand and heightened project delivery risks in the short term, against the need to invest and secure long-term supplies to deliver on these objectives.
“It is time for government to recognise and address the challenges faced by the producers – not just focusing a narrow list of so-called ‘critical’ minerals as it has done so far – but for all essential minerals and the manufactured products derived from them that underpin economic activity.
“The wider minerals sector, which is responsible for producing over a million tonnes of raw materials and products every day, is crippled by an ineffective planning regime, falling replenishment rates, rising taxes and constant government U-turns on its own construction pipeline. It is time for a much needed strategic re-think, before these challenges start having a wider detrimental impact on our ability to deliver sustainable growth.”
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