The commodity market is unsettled. This affects the agricultural business in various ways. Relatively expensive grain is a nice bonus for wheat cultivation, but high wood and iron prices cause a significant increase in the costs of, for example, a new storage shed or new cubic boxes.
The iron price has not only risen in recent times due to increased demand, mainly from China. The Corrego do Feijao mine of Brazil's Vale SA, one of the largest mines of one of the largest mining companies in the world, was closed at the end of last year after two fatal accidents in just over a year occurred due to dam breaches. In an already tense market, reduced production is causing an additional price increase.
Prices for tubes and tubes have doubled in price compared to December 2020. For beam steel, the increase is less extreme, but still 20 to 30% according to insiders. Sandwich panels have also become approximately 50% more expensive compared to December.
Looking for wood
Wood is also in high demand and not only in the European construction sector. Several sources report that American and Chinese companies are also importing a lot of wood from the Baltic Sea region, the most important forestry area in Europe.
Sawmills can hardly meet the increased demand. For example, sawmill inventories in Sweden are at their lowest level in 20 years. The price of coniferous wood used for boxes, drying walls, purlins and the like has doubled compared to the same period last year. Hardwood has become approximately 30% more expensive.
Other factors
High raw material prices are not the only cause of higher construction costs. Society has changed due to the corona crisis. Various sectors are able to benefit from these changes and continue to invest in, for example, new buildings.
To alleviate the shortage on the housing market, additional houses are being built. Outings or holidays are difficult or impossible and working from home has taken off. Relatively many private individuals therefore invest in renovating their home. This together creates additional demand for building materials.
The corona crisis has also caused disruption in logistics chains. Prices in logistics have exploded and transit times on various intercontinental routes have become approximately 6 weeks longer than before the corona outbreak.
A lot of work
Despite the increased costs, several construction companies report that they have a lot of work, including from customers in the agricultural sector. According to various construction companies, the extra demand is mainly due to arable farms. In livestock farming, demand has remained more the same as in recent years.
"There seems to be more construction going on, especially in the south of the country," says Barry Akkerman team manager at DLV Advies. "Not only have prices increased, delivery times for building materials have also increased. There is only limited production capacity for piles. Due to the high demand for piles, delivery times have been delayed by approximately 5 months. But steel constructions also require an average additional delivery time of approximately 2 months. "It's a puzzle, especially with storage sheds. In many cases they have to be ready for the new harvest."