Despite the labor and supply chain challenges, construction firms projected growing demand for commercial projects and public works. As expected, experts have agreed that the costs of most construction materials will likely increase or remain the same this year.
We’ve rounded up the top supply chain issues that may affect the cost of your upcoming construction project:
In the last two years, the price of aluminum has increased by more than $1000/MT. By December 2021, it touched $2700/MT. It is projected that this year, the average price of aluminum will increase by 5 – 10%.
There’s also a global shortage of bauxite, a critical raw material for aluminum. This is due to Australia’s production cutdown. Australia is the second-largest producer of bauxite globally.
There’s a shortage of bricks supply in other parts of the globe, including the UK and the US. However, the trend is different in Australia. The supply of locally made bricks can still accommodate the demand. The real issue here is that there are not enough bricklayers to lay them. In fact, the sector reported a scarcity of labourers of all kinds.
Bricks overseas face shortage but it is a common occurrence every year.
The supply for copper is fairly optimistic, and it is reported to exceed the demand this year. This can counteract the increase in prices.
Standard Chartered Bank forecasted that the price of copper will be at $9150/MT for 2022. And for next year, it is projected to be at $8300/MT.
The price of imported structural steel doubled last year. In October 2021, David Buchanan, CEO of Australian Steel Corporation, shared that Australia is already facing a steel shortage.
When the pandemic hit the globe, steel manufacturers slowed down their production expecting that the demand would decrease. However, what happened was the total opposite. Thus, creating a supply and demand concern for most countries, Australia included.
In 2021, there was a dip in shipment for iron ore, but experts projected that it would improve this year. Supplies will increase to augment the global demand. Morningstar forecasted that the average price of iron ores will be $116 a tonne between 2021 and 2024. But with the global economic and health situation, iron ore prices remain volatile.
The price of timber will continue to increase in 2022 on a global scale. In Australia, there is still a supply shortage and it challenges the demand for new construction projects. The shortage can be attributed to the 2019 and 2020 bushfires that destroyed hectares of plantation.
According to seasoned builders, the waiting time for timber products can be between 22 to 26 weeks – a critical consideration when scheduling your projects.
Delays are expected not just on timber but also on other construction materials. In response to the COVID-19 pandemic, shipping firms idled more than 10% of the global fleet. This has affected the volume of the shipment and the price.
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