The recovery of the housing sector has undoubtedly caused a rapid increase in the demand for materials and contractors are finding it difficult to source bricks from suppliers.
Order periods are getting longer resulting in a problem for contractors in the short term. Furthermore, some of the larger house-builders and contractors have tried to secure their supply, which will exacerbate the problem for others.
However, large brick manufacturers have opened up mothballed production lines so that, in the medium term, production will rise to meet demand.
The Brick Development Association (BDA), feel that contractors have become accustomed to large stocks being immediately available during the recession and now need to get back to planning their deliveries and placing orders suitably in advance. Further, the BDA report that many brick manufacturers have continued production during the winter to meet rising demand, and so see no reason why brick factories will not be able to cope with increased production.
This is reinforced by BIS statistics on brick production, deliveries and stocks, which show that over the past year (June 13 to June 14) production has risen 17%, while deliveries are much the same as they were a year ago. However, as deliveries have been higher than production for most of this period, stocks have fallen by 25%. As a result, stocks currently represent only two months’ demand compared with three months a year ago (and seven months back in 2009).
The increased demand has affected prices and the BCIS data collection team has recorded a 6% to 8% price increase in June 2014 from a major brick manufacturer. This is consistent with the Producer Price Index for bricks produced by BIS, which shows prices from manufacturers generally increasing 8.5% in the year to June 2014.
Because of pressures of demand for bricks in the supply chain, the declining stocks may well have led to a short term increase in excess of this from merchants.
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