The forecasted declines predicted for both the construction and RM&I sectors do seem to be being translated into reality with substantial declines in both sectors. In turn, this is reflected in volume decline in the fastener and fixings sector.
Given the current economic outlooks for both the economy generally and construction specifically, it seems unlikely these downward volume trends will continue through the rest of 2023.
While interest rate rises are having an adverse effect on construction activity, they have helped the pound strengthen against the US dollar. Slower global economic growth has led to lower demand for products in China, leaving many factories running under capacity, which has allowed prices to ease somewhat.
These factors, together with contracted shipping costs remaining stable, has led to moderate cost price deflation in sterling for fastener and fixing product imports – which covers the bulk of products sold in the UK.
This deflation is starting to feed through into the market with some prices starting to ease and should continue for the rest of the year and into early 2024.
The war in Ukraine continues to impact the sector in unexpected ways. The EU has updated its sanctions on Russia by introducing new measures from 1st October 2023, which require importers of all steel products to prove the original steel in the products did not come from Russia, irrespective of where the product was manufactured.
This has the potential to disrupt the supply chain to Northern Ireland as most stock currently in the UK will not have the necessary certification to allow its entry into the EU single market, of which Northern Ireland is part.
It also seems very likely the UK will introduce a similar measure shortly, but as long as a few months’ notice is provided by the Government, this should not disrupt the UK market.