Mallorca Construction: Shortage of raw materials



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The lack of raw materials in the construction industry is drive up prices and cause delays up to 3 months in public and private works.

Public tenders have fallen by 30% this year in the Balearic Islands compared to 2020, according to the Association of Construction Companies & Infrastructure Concessionaires, or Seopan.

There is more demand than supply“said Sandra Verger, director of the Balearic Builders Association.

Over the past year, copper prices soared 100%; 30% for wood and steel; 78% for corrugated steel; 56% for aluminum; 85% for bituminous mixtures and 70% for PVC pipes.

In most cases, the increase in the price of raw materials has completely explode the budget.

Budgets that raw material suppliers give to construction companies and other customers are now only valid for 7 days, whereas they are typically valid for 30-90 days.

“This situation makes it very difficult for builders to prepare a budget,” said Verger.

Delivery delays also make almost impossible for builders to meet deadlines and many public and private contractors could face penalties if projects are not completed on time.

“For the moment, the penalties do not apply because the delays are attributable to third parties, not to construction companies,” she added.

The shortage of raw materials too affects several other trades, including carpenters, metalworkers and plumbers as well as the sale of electrical appliances and fireplaces.

The Builders Association says there is no evidence of crippled projects yet, but rising raw material prices have already been passed on to consumers, meaning house prices will rise even more in the Balearic Islands.

Energy

Construction companies and related businesses are also faced with higher electricity bills.

There are urgent calls for regulatory reform aimed at implementing a price review in public and private works and establishing mechanisms for extending contractual deadlines.

The National Construction Confederation has warned that in some cases it is a choice to abandon a project altogether or face a doubling of costs.

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