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MPA reports lower demand for mineral products

Published by , Assistant Editor
World Cement,

According to the Mineral Products Association, construction market demand for mineral products was lower in 2Q17 than in the previous quarter. This evidences a more general slowdown in construction activity in recent months.

Mineral products such as aggregates and ready-mixed concrete (RMC) are key elements of the construction supply chain, particularly in the earlier stages of projects. The bulky and comparatively low cost of these materials also means that they are not usually stocked for future use on project sites. This means that MPA sales volumes, which represent between 70% and 5% of total GB markets for these materials, can be used as a reliable and straightforward indicator of construction activity.

Following three quarters of generally positive activity across MPA markets, following the EU Referendum, demand for construction materials declines in 2Q17, both compared to 1Q17 and 2Q16. Sales of aggregates and RMC fell by 5.1% and 5.3% respectively compared to 1Q17. Asphalt sales fell by 2.4% over the quarter, although overall results for 1H17 remain 5.2% up compared to 1H16. Mortar sales had accelerated significantly post referendum in line with housebuilding, but weakened in Q217, down 2.5% compared to the previous quarter.

Given the current forecasts for softer economic and construction activity in the medium term, a slowdown in overall markets activity was expected this year. Going forward, a big driver for construction activity and markets is expected to come from infrastructure, including Highway England’s road programme and the start of big projects such as Hinkley Point C and HS2. However, anecdotal reports of continued delays are holding back sales.

On an annual basis, and despite the weaker performance in 2Q17, sales volumes for the year finishing in June 2017 remained positive across all major MPA construction minerals, with asphalt up 4.8% compared to the previous year, 2.9% for aggregates volumes and 1.4% for RMC. Mortar sales, the strongest market, grew by 8.4% over the period.

Aurelie Delannoy, Chief Economist at MPA, commented, “The weakening of demand across all major construction mineral products markets provides evidence of a general slowdown in construction activity, which was also highlighted in other data sources. Mineral products producers find themselves facing something of a dilemma, with construction activity in housing and commercial building expected to slow down this year, whilst the big infrastructure projects are only expected to come to full capacity in 2018/19.”

“Given the current macroeconomic and political uncertainties, it is of the utmost importance for business confidence that planned projects do not see any further delays, as this may have a detrimental impact on future industry investment and the supply chain.”

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Construction news Concrete news