Construction materials

Germany’s building material shortage eases, southwest floods

LONDON (ICIS) – The shortage of dent production materials in the German construction industry eased in August compared with July, but more than 40% of companies still reported difficulty in sourcing materials, the Ifo research institute said on Monday.

However, businesses in southwestern Germany are still reeling from the July floods that affected
caused widespread disturbance rail and road transport.

Nationally, 42.2% of construction companies reported material shortages, up from 48.8% in July.

In public works – or civil engineering – material shortages were less pronounced overall, and also eased in August, with 31.4% of providers reporting shortages, up from 33.9% in July.

SHORTAGES OF MATERIALS AND LABOR
Despite the improvements reported in August, the overall supply of materials for the construction industry “remains very limited”, with the availability of petrochemical-intensive insulation materials still very limited; the steel is also very tight, said Ifo.

“We are seeing some relief in lumber, but many wood products are still hard to find. The bottleneck is pushing prices up, especially in building construction. Many companies are reporting price increases there, and almost half of the companies in the sector also expect further increases in the near future, ”said Felix Leiss, researcher at Ifo.

“The shortage of skilled labor is an additional concern for the construction industry. Currently, one in three companies complains of difficulties in finding suitable staff.

FLOOD DISRUPTION CONTINUES
The 2021 floods in Germany were historic in every way, and the human and economic costs are still counted; Heavy rainfall in July caused several rivers to overflow, wiping out entire neighborhoods of small villages around southwestern Germany.

The logistics of petrochemicals have been largely disrupted, as has practically all manufacturing sectors in Germany; the German lander in North Rhine-Westphalia was the worst affected state, and logistics in that state are still in shock as work to rebuild railroads and roads continues.

“The July floods in Germany triggered further local upheaval. We received reports in August, in particular from North Rhine-Westphalia, that the events had exacerbated the shortage of materials, ”said Leiss.

“The proportion of companies affected is now significantly higher than the German average.”

The rise in the prices of building materials in Germany is also taking place in the rest of Europe; Prices for polyvinyl chloride (PVC), a key petrochemical widely used to make pipes and profiles, have nearly doubled in the past 12 months.

PVC is also used in the automotive industry – which suffers from its own supply chain issues – and in the production of medical devices.

CIHI monthly PVC contract prices for July in North West Europe (NWE), Mediterranean and UK increased due to generalized tightness.

Visit the First page CIHI on the construction sector


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