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Freedonia Market Research Blog Possible Construction Supply Shortages?

Possible Construction Supply Shortages?

by Freedonia Industry Studies

March 5, 2020

Developers are starting to wonder about the impact of COVID-19 on their ability to complete existing projects or to begin new large projects.

US and European contractors rely heavily on Chinese imports for building products ranging from steel to wiring to cabinets. Work stoppages at China’s manufacturing facilities and ports have constrained supplies for building products, leading to delays in the receipt of crucial materials that were not shipped prior to major shutdowns.

Financial fallout for both contractors and customers is expected, although the total impact will vary significantly based on the duration of the outbreak. Although major projects purchase the supplies they need well in advance and therefore may not be effected, others may not be so lucky.

In the meantime, firms are looking for alternate supply channels – both in the US and outside of China – even though they are more expensive. Additionally, contractors may be looking to buy up available supplies in order to have a stock on hand, which would drive prices up even further. Overall, these behaviors drive up prices and shift demand.

As a result, even construction material firms with adequate domestic supplies available to sell might be challenged by unpredictable sales trends that contradict typical seasonal patterns.

For more information, see The Freedonia Group’s extensive collection of reports on the Construction & Building Product industries.

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