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Mineral sales down in Q3

Words: Laura Edgar
Aggregates / Shutterstock_654718486

Sales volumes of mineral products declined in the third quarter of 2018 across all markets monitored. The figures show that construction work is skewed towards housing.

Seasonally adjusted sales numbers show a 4.6 per cent decrease in asphalt on Q2, the sharpest decline of all materials.

Mineral Products Association (MPA) figures also show that mortar sales were down 4 per cent; aggregates by 2 per cent; and ready-mixed concrete by 1.5 per cent, when compared to the previous quarter.

The second quarter saw a rise in mineral sales after poor weather affected sales at the start of 2018.

The increased volatility of markets this year includes mixed fortunes between mineral products and construction markets, the MPA explained. Asphalt (-0.2 per cent) and aggregates (0.7 per cent) returned a broadly flat market in the first nine months of 2018 compared to those months in 2017. In contrast, there was a 3.5 per cent fall in ready-mixed concrete and a 15.2 per cent increase in mortar sales.

However, despite quarterly falls across all materials, sales volumes in the third quarter remained above historical averages (since 2004 Q1) for aggregates, asphalt and mortar, but not for ready-mixed concrete.

The MPA said the results reflect current construction work. Evidence from its members show that 40 per cent of ready-mixed sales are used in commercial, industrial and public construction projects, such as schools and hospitals. 20 per cent is used in housing. Mortar is mainly used in housebuilding: The strong growth in sales so far this year shows that construction work continues to be skewed towards housebuilding.

Regionally, the decline of sales in the ready-mixed concrete has been driven by London. Volumes were 5.4 per cent lower in the first nine months of the year compared to a year earlier. This reflects a slowdown in housebuilding and commercial offices in the capital.

The Construction Products Association has forecast construction activity to remain flat for the rest of the year but to grow modestly in 2019/20, due to expected growth in housing and, more so, increased development of major energy and transport infrastructure projects. Commercial is forecast to remain weak until 2020.

Aurelie Delannoy, director of economic affairs at MPA, explained that the “long-awaited boost” to major infrastructure projects and the Road Investment Strategy previously planned from 2019 is now forecast to feed through more slowly given the continuous delays in the roads programme and main works on HS2.

“Mineral products producers outside mortar are now facing the prospects of markets remaining flat to marginally negative for an extra year, in 2019. Modest growth is only expected to resume from 2020, depending on the Brexit negotiations progressing as the year ends, with a transitional period agreed as part of the Withdrawal Agreement. The prospects of a ‘No Deal’ Brexit is not one that would be desirable for businesses in our industry, and is causing great concern,” she said.

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Graph | MPA