Sales of heavy-side building materials slumped in second quarter as the economy and construction slowed.
The latest statistics from the Mineral Products Association (MPA) show that sales of heavy-side building materials, including aggregates, ready-mixed concrete (RMC), asphalt and mortar saw unprecedented declines during the second quarter of the year. Aggregates sales volumes were 38% lower, RMC 39% and asphalt 28% on a quarterly basis. The swift closure of housebuilding sites as the lockdown was announced in March resulted in the mortar market suffering an even sharper fall in demand, with sales volumes down by 61% over the quarter. Overall, the impact of the Covid-19 lockdown has been worse than the financial crash between 2007 and 2009.
Regionally, the decline in construction demand was particularly severe in Scotland, where the vast majority of construction sites were ordered to close, bar for some limited essential works. As a result, Scottish sales volumes of aggregates fell by 69% over the quarter, asphalt by 85%, and RMC by 89%. Construction work has now been permitted to resume since 12th June wherever physical distancing can be maintained, suggesting some pent-up demand could be expected over the summer.
Aurelie Delannoy, Director of Economic Affairs at the MPA, cautioned that the contraction seen so far only reflects the direct impact of the lockdown during April and May, not the overall impact of the pandemic and resulting macroeconomic weaknesses. “While there has been a gradual pick-up in activity since mid-May in England and Wales, much of this reflects post-lockdown pent-up demand. The industry therefore remains concerned about the shape, speed and resilience of the recovery over the next few months, particularly order books throughout the autumn and into the winter.”
Nigel Jackson, CEO at MPA, added “The next few months will be critical for all businesses in the mineral products industry, small, medium or large. It is welcome to see Government putting infrastructure, including for public health, at the heart of its recovery plans. It is also refreshing to receive clear recognition of the essentiality of our industry to the economy. Government’s ambition now needs to be put into action; delivery of the planned pipeline of infrastructure projects needs to be accelerated and our industry stands ready to play its part and supply the main materials needed to ‘Build, Build, Build’. Important as it is to ‘build back better’ right now the priority is survival and to get back to levels of activity expected pre-Covid-19.