Price rises to boost demand?

Construction materials prices are rising again, which could bring developers and other clients who have been waiting for prices to hit bottom from off the sidelines, says BCSA. Steel price rises are being driven by sharply rising raw materials costs worldwide and more rises look to be on the cards.

BCSA Director General Dr Derek Tordoff said: ”The price rises are regrettable but inevitable given the background of rising iron ore and other raw material costs. But the trend could put an end to the policy of waiting for prices to fall further before committing to new developments.

“There appears to be a shortage of commercial property of the right type for the needs of many building users, and developers will be concluding that now is the time to move to catch low prices and to be ready for the next upturn.”

Prices from steel makers will have increased by around £190 per tonne for the first half of 2010 once already announced rises take effect. A rise of £50 per tonne in March is being followed by a £60 per tonne rise from May. BCSA expects a further £80 per tonne rise in June.

Dr Tordoff added: ”Iron ore costs have typically doubled and the cost of coking coal has risen by around 70%, largely due to the heavy demand for steel in the rapidly developing markets in China and India. Rival materials will also have to put their prices up and we expect the competitive position of steel construction to be maintained.”