What is happening with market pricing?

The short answer is that market pricing is the most unstable it has ever been in living memory. Whilst the Government and national media continue to publicise the main causes – the global post-Covid-19 recovery and the war in Ukraine – there are so many impacts that we collectively face a perfect storm that is leading to huge market price instability.

Before you read the below, bear in mind a recent conversation with an electrical contractor who found in April that some distributors would not price electrical cable for longer than 7 days, whilst others would only give a price for that day. On another day the price of cable from the same supplier increased 3 times in that day. So, what is causing these issues for the flat roofing industry?

The post-Covid-19 recovery is still an issue; not only are staff off work with new Covid-19 infections, but many have chosen to either not return to work or to change career. This continues to impact productivity at all layers of raw material production, distribution, transport, storage, sales and order processing.

BREXIT is rarely mentioned by politicians, but the loss of EU employees, border controls delaying imports and the impending requirement for UKCA marking are all having an impact.

Transport is impacted by the lack of truck drivers and delays at ports (see BREXIT) as well as the highest fuel prices in history.

The Automotive industry was hit hard by Covid-19 but the resulting upturn in manufacturing impacted demand for key chemicals also used in the construction industry to manufacture insulation. The resulting Polyol shortages in 2017 and MDI shortages in 2020 drove prices of PIR insulation up.

Natural disasters impacted production facilities in various parts of the world, especially the USA, closing down factories that produce vital component chemicals for insulation boards and affecting supply of both PIR and XPS.

Fuel and energy costs are having the greatest impact at present, impacting raw material production, product manufacture, storage, distribution, office and staff costs – basically every aspect involved in making and getting the product to site.

Regulatory changes have also had a significant impact, particularly the demand for non-combustible insulants following the changes to the building regulations driven by the Grenfell Tower tragedy. Demand for Mineral Wool and Cellular Glass insulation has simply gone through the roof, with both impacted by the factors above, but from a contractor’s perspective there is also the issue that they were considerably more expensive than PIR insulation already, for example a tapered Cellular Glass system can now cost over £350m2 to achieve a 0.12 W/m2K U-value.

In real terms, compared to January 2021, all insulation boards are significantly more expensive:
• PIR increase = 80% +
• Mineral Wool increase = > 70
• XPS increase = > 40%
• Cellular Glass increase = > 35%

Currently it doesn’t look like prices will come back down until sometime in 2023 subject to the impacts reviewed here positively changing.

Next month’s QI by QI – The impacts of changing insulation specification on fire compliance