Construction materials in midst of historic price hike

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Shoppers in a construction store. Source: ERR

The prices of construction materials are rapidly climbing as producers are having issues obtaining raw materials with deliveries having been delayed by months in some cases.

The global raw material deficit and supply issues have brought forth a shortage of construction materials and a price bump. The market is volatile and sale prices in some product groups no longer last for days and weeks, but rather for hours.

It is quite usual in the start of the construction season that demand for materials grows and producers have accounted for the sector's seasonality. However, it is currently very difficult for construction stores to get their hands on any kind of materials, admitted Decora CEO Eike Tubli-Müür. The main reason why construction material producers cannot satisfy demand is a shortage of raw materials worldwide and subcontractor supply issues.

"The biggest problem is with stone wool and foam. The supply times have moved from two weeks to two months. There are also issues with the availability of different building blocks. If delivery times were around two-three days before, they have stretched out to two-three weeks now," Tubli-Müür said.

Paving stones, wood, metal - the list goes on. While there are no actual shortages for some of these materials, prices have gone up. The availability of OSB boards, however, is nearly non-existent and no one knows anything about future deliveries.

The Decora CEO admitted that while price jumps in earlier years have stayed around 3-4 percent, the price increases for some products this year have been colossal.

"Today, we can even see 50 percent increases for metal. It is a pity that some prices only last for up to 24 hours. But a 20-30 percent price increase for some general construction materials is actually completely regular," Tubli-Müür noted.

Bauhof marketing director Maarja-Liis Toomik confirmed that the pressure on prices is unlike anything the sector has ever seen. "The situation has gotten interesting. Both pricing and supply are done by a semi-auction method. Whoever makes the best offer gets the goods," Toomik noted.

"In many places, if long-term agreement have been made with suppliers and they have guaranteed us some prices and quantities - that does not exist anymore. In principle, sales are done based on a living queue," she added.

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Editor: Kristjan Kallaste

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