Demand for mineral products flat over first quarter
Disappointing flattening of construction work in recent months but general indicators remain positive
THE Mineral Products Association (MPA) says sales of mineral products in the first quarter of the year provide hard evidence that recent construction activity has flattened out.
Whilst overall activity is still positive on an annual basis and higher than the first quarter of 2015, sales of aggregates, ready-mixed concrete and mortar have been static in recent months, and asphalt sales have continued to decline.
According to the MPA, annual sales volumes were modestly positive in the 12 months to March 2016, with aggregates, ready-mixed concrete and mortar sales volumes up by 3%, compared with the previous 12-month period, and asphalt sales up by 1%.
However, compared with the fourth quarter of 2015, aggregates sales volumes were broadly flat in the first three months of this year (–0.1%), whilst ready-mixed concrete sales volumes fell 1% and mortar fell by 0.2%.
The overall flattening in these markets indicates a slowdown in general construction activity, says the MPA, with housing growth having slowed significantly in recent months and anticipated improvements in commercial and industrial work yet to be seen.
Asphalt sales in Great Britain have now fallen by around 4–5% for two consecutive quarters, indicating that road construction and maintenance activity has also slowed down. This is supported by Office for National Statistics (ONS) infrastructure construction data, which indicate lower levels of output since last summer.
In England, asphalt demand has declined for three consecutive quarters following a strong first half of 2015, raising industry concerns about the speed of delivery of both national and local road investment and maintenance programmes.
On the assumption that improvements in housing, infrastructure and commercial activity will be evident as 2016 progresses and through 2017–19, construction activity is now forecast to grow by 3% this year, down from 3.6% in Construction Products Association’s winter forecast, followed by 3.5–4% per annum until 2019.
Based on this forecast and the current pipeline of infrastructure work, by 2019 the MPA expects aggregates sales to be up 16%, compared with 2015, ready-mixed concrete, cementitious materials and mortar to be up 13%, and asphalt sales to be up 14%.
Nigel Jackson, chief executive of the MPA, commented: ‘Whilst our results show a disappointing flattening of construction work in recent months, the general indicators remain positive in spite of uncertainties such as those related to global economic performance and the EU referendum.’
He continued: ‘One particular problem is self-inflicted in England. In spite of the new national Road Investment Strategy starting in 2015/16 and cash announced for local road maintenance, asphalt sales have declined in England for three quarters, suggesting there is a serious problem with the implementation of road improvements and again raising concerns about our ability to match ambitious infrastructure investment plans with project delivery.’
