Gas boilers face further UK supply disruption in 2022, industry analysis warns

The UK continues to see some supply challenges for boilers, electrical products that use semi-conductors or chips, and certain other construction goods needed by the HVAC sector, new analysis warns.

A statement from the Construction Leadership Council (CLC) Product Availability Working Group said there were “good stocks and availability” for a wide number of products needed by the industry on the back of strong demand for work during the first two months of the year.

However, it noted that products such as boilers, cable trays and trunking as well as bricks, roof tiles and steel lintels continued to see supply chain issues and delayed lead times. These could persist into the Spring on the back of a series of disruptions over the last year, the analysis noted.

The CLC also said that it was uncertain how Russia’s invasion of Ukraine and the resulting barrage of sanctions against the country, combined with already surging energy costs, might impact supply and demand for a range of building engineering solutions in the coming years.

Builders Merchants Federation chief executive John Newcomb and Construction Products Association chief executive Peter Caplehorn – co-Chairs of the CLC product working group – said that the costs of goods were becoming an increasingly significant issue for construction.

A joint statement from the group cited price inflation driven by a range of factors such as a shortage of raw materials, as well as rising energy, freight and labour costs, as being a greater concern to projects than pdocut availability.

The working group stated, “Price increases of five per cent to 10 per cent have been announced by many manufacturers so far this year, and energy-intensive products have increased by as much as 20 per cent.”

“Such inflation is proving a root cause of serious difficulties for contractors.”

Other major concerns identified by the group included labour shortages across all aspects of the construction sector that it warned had shown few signs of changing.

Fears in recent months about road haulage capacity were seen to have shown some signs of improvement after the government worked with industry to limit the impacts of a shortage of HGV drivers, the CLC working group stated.

At a global level, the working group said transport delays and costs continued to be felt in terms of shipments of goods from China and other parts of Asia. Shipping rates were found to be around eight to nine times higher than before the Cvodi-19 pandemic.  Air Cargo rates had meanwhile risen by about seven times over the same period, according to the working group.

Russian invasion impact

The analysis added that the worldwide response and imposition of sanctions on Russia as a result of its ongoing military invasion of Ukraine was likely to result in “enormous implications” for trade and commodities for years to come.

The working group said, “The effect of the war on the building material supply in the UK is still to be determined. The region including Russia, Ukraine and Belarus (which is also facing sanctions) accounted for only 1.25 per cent of building products imported into the UK last year.”

“However, there are likely to be higher levels of direct and indirect exposure to some product components either through raw materials such as aluminium, copper, bitumen, and pig-iron and iron ore used in the manufacture of steel, or through higher prices in more-exposed European markets.”

Other considerations from the invasion that could impact the UK supply chain was the ongoing use of sanctions against Russian firms and individuals with links to the Kremlin, according to the CLC.

Likewise, organisations such as the European Federation of Building Material Distributors (UFEMAT) was urging all members to cease importing Russian building materials until the country ends its war in Ukraine.

The CLC said that it was important to note that Russia was also a major supplier of crude oil and gas to Europe.  The analysis said that while the UK itself imports four per cent of its gas from Russia, UK energy prices would still follow rising costs in Europe that have double during the course of 2022.

It said, “Should sanctions be applied to energy products, replacing gas from Russia globally will lead to even greater price volatility for energy intensive products.”