Fall in demand for mineral products in Q2 2017
Latest MPA statistics provide evidence of slowdown in construction activity in recent months
THE Mineral Products Association (MPA) says construction market demand for mineral products was lower in the second quarter (Q2) of 2017 compared with the previous quarter, providing evidence of a more general slowdown in construction activity in recent months.
According to the Association’s latest quarterly statistics, after three successive quarters of generally positive activity across MPA markets post the EU Referendum, demand for construction mineral products declined in Q2 2017 compared with both the first quarter of 2017 and Q2 2016.
Sales of aggregates and ready-mixed concrete fell by 5.1% and 5.3%, respectively, compared with the first quarter of 2017, representing the fastest quarterly rate of decline since the third quarter of 2013 for ready-mixed concrete and since the second quarter of 2012 for aggregates.
Asphalt sales fell by 2.4% over Q2 2017, although overall results for the first half of the year remain 5.2% up compared with the first half of 2016. Mortar sales, which had accelerated significantly post-referendum, in line with house building, also weakened in Q2 2017, down 2.5% compared with the previous quarter.
A slowdown in overall market activity was expected this year, given current forecasts for softer economic and construction activity in the medium term, but the MPA says that although a big driver for construction activity and markets going forward is expected to come from infrastructure, including Highway England’s roads programme and the start of big projects such as Hinkley Point C and HS2, there are anecdotal reports of continued delays in Highways England’s renewals projects continuing to hold back asphalt sales in England, whilst activity on Scottish roads is now winding down markedly.
Simultaneously, sales volumes of ready-mixed concrete in London have now declined for three consecutive quarters, suggesting the market there may have peaked last year, although volumes remain at very high historic levels.
Nevertheless, on an annual basis, and despite the weaker performance in Q2 2017, the MPA says sales volumes for the year ended 30 June 2017 remained positive across all major construction minerals, with asphalt up 4.8% compared with the previous year, aggregates volumes up 2.9% and ready-mixed concrete up 1.4%. Mortar sales, the strongest market, grew by 8.4% over the period.
Aurelie Delannoy, chief economist at the MPA, commented: ‘The weakening of demand across all major construction mineral products markets provides evidence of a general slowdown in construction activity, which was also highlighted in other data sources.
‘Mineral products producers find themselves facing something of a dilemma, with construction activity in housing and commercial building expected to slow down this year, whilst the big infrastructure projects are only expected to come to full capacity in 2018/19.
‘Given the current macroeconomic and political uncertainties, it is of the utmost importance for business confidence that planned projects do not see any further delays, as this may have a detrimental impact on future industry investment and the supply chain.’
