As economies around the world recover from the initial impacts of the Coronavirus pandemic, we now collectively face a worldwide shortage of steel. This is directly impacting supply in to the Construction Industry, which requires us to take the appropriate actions to manage our supply chain until supply of steel improves and we can rebuild stocks of our metal products, allowing a return to our usual service levels.
During April and May 2020 as the Covid-19 pandemic emerged, worldwide demand for steel decreased dramatically. This led to steel furnaces being switched off for several months as the global supply chain was overstocked. From the latter part of 2020, demand has increased significantly around the world, and construction demand has recovered quickly in the UK and remains strong. Due to stocks being depleted throughout the global supply chain and despite the steel mills being fully operational once more, there is currently not enough steel in the supply chain to meet the total global demand. This underlying supply challenge has been exacerbated by import and vessel delays caused by changes in procedures post Brexit.
We typically ensure a comfortable buffer of steel stock is kept in the supply chain, but due to the current global challenges and strong local demand above forecast through the first quarter of 2021, our ability to supply our valued customers with their full steel requirements in the coming months will be constrained. During this time, in order to support our customers as fairly as possible, we will be implementing a process of product allocation for Gypframe Metal and Metal accessories.
The allocation system will be in place for all new Gypframe metal orders to be delivered from week commencing Tuesday 4th May 2021, in line with advised allocation quantities. Until 3rd May 2021, we will aim to fulfil as many of the existing accepted and confirmed orders, subject to product availability, but expect there will be some individual product quantities that cannot be totally fulfilled in the short-term.
We have previous experience of operating an equitable allocation system positively. Our aim is to ensure product is fairly distributed to our existing customers whilst allowing us to restore our usual service charter offer as quickly as possible. Our metal products are being delivered to our usual merchant, distributor and DIY stockist customers according to their allocation volumes so please liaise with your usual stockists regarding your product requirements.
We appreciate that allocation means we may not be able to support your full product requirements in the short-term, however our aim is to ensure product is fairly distributed to our existing customers. Our hope is that the global supply of steel will improve quickly, that allocation is short lived and we will be able to restore our usual service charter offer as quickly as possible.
In the meantime, we are thankful for your support and appreciate your co-operation.
Managing Director, British Gypsum