Demand for mineral products falls for second quarter in a row, says MPA

Demand for aggregates, asphalt and ready-mixed concrete has declined for the second quarter in a row in the 3Q22, according to the UK-based Mineral Products Association (MPA). MPA members supply around 90 per cent of the total market for minerals and mineral products in Great Britain, predominantly to the construction industry. 

Sales volumes were not only down on 2021 but also below their 2019 level. Over the past year, compared to 2019, aggregates sales have fallen 2.3 per cent, asphalt by 1.1 per cent and ready-mix concrete by 10.1 per cent. While softer growth in sales volumes was expected this year following the sharp COVID-related recovery in 2021, the downward correction has been deeper and occurred more quickly than anticipated, according to the MPA.

The decline over the summer months suggests that a more widespread cooling in construction activity may already be underway. Mortar sales, in contrast, have expanded by 0.6 per cent over the last year, driven by rising housing starts. 

Momentum in mineral products demand dropped off markedly from June, with the main concern being that widespread cost inflation throughout the construction supply chain may have started to negatively impact on demand. An otherwise solid pipeline of future construction projects is being hindered by the unprecedented cost pressures for energy, raw materials and labour, and paving the way to a wider industry slowdown.

Luke George, economic and policy analyst at the MPA, warned that the reduction in demand for minerals is expected to continue in the final months of the year and into next year. “The slowdown in mineral products sales volumes over the summer reaffirmed that the confidence loss in June has become more entrenched. Prospects for the UK economy and construction activity look bleak given major headwinds from high inflation and the new Government’s fiscal U-turn, which will almost inevitably lead to higher taxes, lower spending and lower confidence,” he said.