The commodities market is particularly volatile. The Federation of Construction Companies is sounding the alarm. The prices of raw materials used in construction have been rising steadily for several weeks. The disorganization of world markets due to the coronavirus crisis is at issue.
Soaring prices for certain raw materials
+ 114.29% increase in PVC price between July last year and February 2021, + 106.67% for steel over the same period, + 51.32% for the copper, +26.91 for l’aluminium, so many raw materials used in construction which are undergoing a surge in prices, according to a study by CAE Groupe and the Center d’Etudes de l’Economie du Bois. Professionals in the building sector are very worried by the scale of the phenomenon.
Guy Berrand, plumber and heating engineer in Verneuil sur Vienne, in Haute-Vienne, explains: We are suffering the full brunt of increases in all the materials we use on a daily basis, PVC for oil changes, copper for water or gas induction, steel for heating. For the moment, we are not passing on the increases, but we will be obliged to update our prices. We can see it clearly on our delivery notes, the price is not what it was 15 days, 3 weeks ago. On copper, for example, over the past 3 weeks, it has increased by 10%, our margins are decreasing “.
These incessant increases destabilize the market.
MARGINS IN BERN, REVERSIBLE INCREASES
Benjamin Chimol, secretary general of CAPEB in Haute Vienne, explains that craftsmen generally have a year in advance in stock of material and do not practice extremely high margins.
With the increase in the price of materials, the problem is that the work they are going to invoice today corresponds to the reality of their market a year ago. So now, when they go to construction sites, some even manage to work almost for free since their margins are absorbed by the increase in the price of materials. This weakens businesses, because very few will want to pass on the increase because customers do not have stretchy finances. In addition, there is a legal obstacle with the general conditions of sale that cannot be changed at will a few months later.
DOUBLE PUNISHMENT: RISE AND SHORTAGE
Regarding steel in particular, blast furnaces in Europe have either been stopped during periods of confinement, or have sharply reduced their activity.
“The steel industry has stopped stockpiling and today only Asia has restarted its production. The United States has resumed steel trade with China, so it is very difficult for European manufacturers and distributors to find steel in sufficient quantity “ adds Benjamin Chimol.
Mechanically, this drives up prices. Wood and its derivatives are affected by the situation.
The Douglas, for example, in our region, we can no longer find anything. There is an increase in cost and a risk of shortage. The United States has changed its trade policy. The agreements with Canada, where they obtained wood, were modified. Consequence: the United States relies on European timber. They buy wood at a high price, which means that European production goes to the United States. ”
CONCRETE CASES: THE WOOD SECTOR IN LIMOUSIN
Idée Bois Construction is a limousine company specializing in the manufacture and assembly of wooden structures. It employs 10 people.
Loïc Lapellegerie, its co-founder, observes with dismay an unexpected and stressful situation : Our main supplier, Piveteau Bois, based in Vendée, told us overnight that he could not deliver the wood ordered to us in mid-November! Of the 12 ordered pallets of framing lumber, we will only be able to have 3 in July. In addition, we can no longer place orders. We had very good purchase prices, now the prices have skyrocketed, over 30%. We found a one-off solution with a small local sawmill that will saw for one of our businesses “.
The difficulty of the craftsmen is toassume this additional cost not covered by sawmills, traders. They are forced to pay the bill without passing on the increase because contracts are signed with customers. The situation would be even worse for single-family homes.
TENSION ON RAW MATERIALS SUPPLY
Supply difficulties are widespread, according to professionals in this sector, for steel, zinc, copper and plastic.
Artisans-painters are worried that the same phenomenon affects their domain.
Didier Métégnier is a building plasterer, based in Saint Léonard de Noblat with 3 employees. He testified: We began to have the first alerts at the national level through the professional network that there were international tensions, especially in relation to the United States. Three weeks ago, we began to have the first formalizations by our suppliers of possible supply breaks, especially in painting. Certain chemicals are used in the composition of so many industrial products that they may be missing and impact all of these products. This is the case with titanium oxide and without this element there is no more paint at all “.
In addition, there are significant price increases. Polystyrene has the greatest increase, + 20 to 26% depending on the supplier.
This material is not very expensive but the increase is significant when it comes to providing insulation from the outside. These professionals fear that these increases are not temporary.
We are not late in the day, so prices will not drop to their pre-crisis level. It’s like the Covid, we know when it starts, but we don’t know when it will stop. Even the prime contractors are worried. ”
PUBLIC PROCUREMENT ALSO IN QUESTION
The case is sensitive concerning public markets. Professional organizations have a role of sensitization to play, according to the secretary general of the CAPEB Haute-Vienne, because some companies can receive late penalties due to shortage of materials. “A real injustice because they have nothing to do with it” explains Benjamin Chimol.
The risk may be that the communities penalize businesses while the shortage is global.
All sectors are affected, from construction to automotive, from the food industry to health.
Bruno Lemaire, Minister of the Economy, was questioned by building professionals, in particular from February. All are waiting for concrete measures to stem the phenomenon.