Rising steel costs are creating fresh challenges for the steel-framed construction sector, with panic-buying ahead of planned import-rule changes contributing to significant price increases. New analysis from Mace Consult shows fabricated structural steel prices have climbed by more than 15% in the past six months, adding further pressure to project budgets and procurement strategies across the industry.
In its latest Market View report, Mace Consult said the conflict in the Middle East had exacerbated trade disruptions and hiked energy costs just as buyers tried to stockpile steel ahead of the UK policy change.
Since the start of this month, tariff-free import allowances have been slashed almost in half, with inbound shipments of many grades above these lower volumes subject to a 50 per cent levy.
Mace Consult said: “Even before the change in policy, it is thought that the new rules have caused panic-buying and had an impact on prices.”
The report noted that material price inflation across all construction projects was 3.2 per cent in April, according to the Office for National Statistics (ONS), which has since published data showing this metric rose to 5.4 per cent in May. This represented the highest rate of annual inflation on building materials for more than three years.
Mace Consult said fabricated structural steel had seen the biggest increase in price in the year to April “in large part due to panic-buying in the lead-up to a new tariff and quota system coming into effect”.
It added: “Not only are steel prices rising but, as the market adjusts, they are likely to be more unpredictable and volatile.
“Adding to commercial risks for lump-sum contracts, client teams will need to carefully assess the most appropriate procurement routes.
“Lead times may also rise, both in the short-term due to panic-buying and in the medium-term if UK manufacturers cannot meet demand or do not produce the necessary type of steel.”
The report also cited ONS data published in May that showed construction output falling by more than a tenth in the first quarter of this year to its lowest level since 2024.
“Looking ahead, the considerable economic and political uncertainty will deter firms from giving new projects the green light, and it seems likely that new orders will remain under pressure until there is greater clarity,” said the study.
Mace Consult called for new prime minister Andy Burnham to give clear messages as soon as possible to support the infrastructure industry.
“Burnham’s support for greater public control of key services could result in increased investment in sectors such as water and energy,” it said.
“However, in the short term, uncertainty around potential changes in ownership structures may cause businesses operating in these sectors to delay investment decisions.
“Providing confidence to investors and supply chains at an early stage will therefore be vital to maintaining spending momentum. The impact of uncertainty should not be underestimated.”
Ceri Evans, global director of cost and commercial management at Mace Consult, said: “The new steel tariff and quota system is unhelpful for construction, resulting in increased costs and further uncertainty. This is on top of rising inflation and depressed activity.
“It is this uncertainty that the new government will need to tackle for the sector to support its growth mission and ambitions for housing and infrastructure.”