Rising Raw Materials Causes Uncertainty In Industry And Construction
The rising cost of raw materials cause uncertainty in industrial sectors. Despite the fact that the real estate sector, for example, ensures that the rise in costs is being kept relatively under control, according to the Appraisal Society, in the industrial and construction sectors there is an increasing warning that inflation will come true at short term.
The strong economic recovery, which some place closer to 9% than the official forecast of 6%, pushes up the demand for raw materials and prices have risen. According to data from the Association of Construction Companies and Infrastructure Concessionaires (Seopan), strategic raw materials have shot up their prices from the lows reached in 2020.
Thus, corrugated steel has risen 78%; copper, 102%; aluminum, 56% and oil, 106%. They are the biggest increases since 2009. And multiple products and transportation costs depend on fuel prices. The pressure on the commercial margins of the companies invites us to think about price increases.
The rise in the price of international freight is another element that seriously worries importing companies. The price of steel containers is at all-time highs. The price of wood has skyrocketed due to increased demand in the US and the prospect of greater use in the real estate sector. House prices in the US have risen 14% in the first half, in part due to this pressure on wood prices.
The consultancy Cushman and Wakefield (C&W) has come to advise in recent weeks that construction companies review their projects and modify the use of materials to reduce costs. In office construction, for example, the firm advises the use of concrete structures instead of steel in high-rise spaces, while in mid-rise buildings it opts for modules to reduce waste and improve efficiency.
It also advises to advance material purchases in anticipation of price increases. or delays in delivery, given the foreseeable failures of the supply chains. Another example is the phasing out of copper from pipes in favor of cheaper materials.