Building materials crisis in SA

Critical shortages of building and construction materials, including cement, steel, bricks and timber, are suffocating the sector’s recovery from the Covid-19 lockdown and diminishing its impact on the recovery of the economy.

David Metelerkamp, senior economist at construction market intelligence firm Industry Insight, said the shortages, if they continue for an extended period, have the potential to derail government’s planned massive infrastructure investment plan to
stimulate the economy post the Covid-19 lockdown.

Metelerkamp said the shortages are probably demand-driven “to a degree” because the construction industry will be one of the better performing sectors in the economy this year as all the other sectors are in deep recession.

Despite their inability to meet the current demand, the steel industry benefits from tariff protection on imports, while the cement industry has applied to the International Trade Administration Commission for protection against imported cement.

Moneyweb is in possession of a copy of the letter by a major wholesaler of building and construction materials that highlights the shortages in various products.

The managing director of the company (neither want to be named) advises clients that it is battling to source sufficient stocks of steel products; bricks, particularly stock bricks; cement and cement-related products including lintels; timber, with certain sizes difficult to obtain; and many imported products, including plumbing, power tools and electrical products.

The company said ArcelorMittal South Africa cannot supply the South African demand and steel is now being imported, but it takes three to four months to arrive and will be much more expensive.

It added that there are severe cement capacity problems throughout the country, while the lead time at present for the supply of bricks is between two and four weeks.

Heunis Steel MD Anton Heunis said the steel shortage has been caused by ArcelorMittal failing to start up its second blast furnace after the easing of lockdown restrictions.

The Concrete Institute MD Bryan Perrie said there are several compounding factors that are leading to cement shortages, including transport problems with Transnet Freight Rail and industrial action affecting trucking companies, plus problems with the supply of fly ash from Eskom.

PPC South Africa MD Njombo Lekula said nobody anticipated the current demand for cement when the lockdown was implemented, and nobody knows if the current demand will be sustained into the future.

Lekula said PPC continued to supply its clients and delayed the maintenance shutdown of its plants where possible to accommodate the growing demand, even while running at 50% capacity at Level 4 of the lockdown.

A director of a Gauteng-based brick manufacturer, who did not want to be named, attributed the shortage of bricks to the Covid-19 lockdown and the fact that brick manufacturers were initially able to sell but not produce bricks as the various levels of the lockdown regulations were lifted.

This article first appeared on Moneyweb and was republished with permission.

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