News Item: Cement Shortages Force Hanson to Cut Allocations

Cement producer Hanson is warning that not only is it unable to meet the growing demand in the market for cement, but it is now facing the threat of a shortage of packaging materials.

In March, the Construction Leadership Council warned that these shortages would get worse before they get better, and in a more recent update, clarified that it would take six months minimum before supply improves. 

"Previously reported issues relating to timber, steel, pitched roofing, plastics and paints/coatings continue," it said. "Growing areas of concern, however, include certain electronic components and bagged cement."

Andrew Simpson, Hanson Packed Products Director revealed that Hanson had had to implement a packed cement allocation in May 2021. This calculated the number of daily loads per customer based on the production and distribution levels that it believed were achievable. Even Hanson's own concrete business has been subject to the same allocation.

"Regrettably, we have been unable to maintain those levels," Andrew Simpson said in a customer update. "We have therefore taken the decision to reduce the allocation from 17th May 2021."

Andrew went on to explain that the cement market has seen an increase of around 30% across all sectors since mid-2020. "This is unprecedented as the market normally fluctuates with high levels of activity in one sector, being counterbalanced by lower levels in others… The bulk cement market consumes roughly 80% of total cement production and Hanson Cement has an even split between bulk and packed cement. The main sectors for cement usage are ready-mixed concrete, concrete product manufacture, construction site activity and builders' merchants. It is essential that we maintain our cement plants to remove the risk of critical failures. Such a failure would have a major impact on the whole UK construction industry.

"Our 2021 shut-down resulted in some unforeseen work being needed, whilst stock levels were lower than normal due to demand. Other manufacturers also performed shut-downs on their plants, with some delayed by Covid restrictions."

The issue is not just cement shortages, he revealed. "In the longer-term we face issues on the availability of packaging (paper and plastic) due to global demand. We have been notified by our suppliers that they could have difficulties sourcing polymers and kraft paper to manufacture cement bags. Pallet availability is also a concern given the increase in demand across all timber markets affecting availability and pricing."

Hanson is part of the German giant HeidelbergCement, but that provides little comfort in the current circumstances. "We are actively looking to increase capacity by importing cement, although this is difficult as the increase in demand is global and there is reduced availability of shipping," Mr Simpson said.

Source: The Construction Index