Strong demand for mineral products in Q2 2018
MPA reports strong recovery in sales volumes following adverse weather conditions
ACCORDING to the Mineral Products Association (MPA), construction market demand for mineral products rebounded in the second quarter of 2018, following a very poor first quarter of the year when activity had been affected by the cumulative effects of exceptionally bad weather and the collapse of construction firm Carillion.
Sales of aggregates and ready-mixed concrete increased by 9.2% and 9.8%, respectively, compared with the previous quarter. Asphalt sales rose 11.3% over Q1 2018.
The recovery in sales volumes for these materials is a clear indication that general construction activity also rebounded from the slow start of the year. The Association said any growth in construction work remains heavily linked to housing market activity.
Mortar sales – which also saw a bad weather blip in Q1 2018 – recovered strongly in the second quarter, up 20.9%, underpinned by continued momentum in house building.
The latest MPA quarterly survey shows that the volume of mortar sold in the second quarter of this year was the highest quarterly total since records began in 2004. However, sales volumes of every other material monitored remain well below their pre-recession peak in 2007.
While improvement in construction market demand in Q2 2018 was very welcome, the underlying longer-term trends remain subdued. Sales volumes for all materials, except mortar, were lower in the first half of 2018, compared with the same period last year, as well as on an annual basis.
In the year to June 2018, sales of aggregates were 1.7% lower than the previous year, 3.1% lower for asphalt and 5.4% lower for ready-mixed concrete. By contrast, mortar sales volumes grew by 12.7% over the same period. The longer-term weakening in the mineral products market suggests construction activity outside house building remains subdued.
Regional disparities also show interesting patterns. Sales volumes of asphalt in the first half of 2018 point to positive road activity in the South East and South West. This was offset by declines in the West Midlands, the northern regions of England and most particularly in Scotland, where a number of large transport projects came to an end last year.
Ready-mixed concrete sales by contrast were weaker across all regions of the UK, compared with the first half of 2017. The biggest decline took place in London, which had seen very strong post-recession growth and most likely reflects a slowdown in commercial office building.
Aurelie Delannoy, director of economic affairs at the MPA, commented: ‘We welcome the recovery in sales volumes in the second quarter, but the outlook for this year has not changed and remains subdued. Sales volumes weakened in the past year in line with general construction work.
‘Outside house building, there are limited sources of growth. However, major infrastructure investments, such as High Speed 2, Hinkley Point C and Highways England’s road programme, should provide a boost, most noticeably from 2019 onwards if momentum is sustained.’