Fixing Construction Material Prices Without Buying or Storing Materials
How contractors and developers can fix material prices using financial price protection agreements without buying early, holding stock, or changing suppliers.
18 Jan 2026
Fixing material prices has traditionally meant one thing: buying early and holding stock.
For many contractors and developers, that approach is not practical. It ties up working capital, creates storage and logistics issues, and introduces new risks around damage, specification changes, or programme delays.
As a result, many projects remain exposed to price movements long after contracts are signed.
Price protection agreements offer an alternative.
Instead of purchasing materials early, parties can agree a price level today and settle any future difference financially, based on a transparent benchmark. The physical supply chain remains unchanged. Materials are still bought from existing suppliers, at the time they are needed.
This allows price certainty without operational disruption.
The key distinction is that you are fixing price exposure, not physical supply.
A simple example helps illustrate the point.
A contractor expects to purchase reinforcement over the next six months. Instead of buying today, they agree a price protection level linked to an index. When the steel is eventually purchased, the physical price may be higher or lower than expected.
At the agreed settlement date:
If prices have risen, the price protection agreement pays out
If prices have fallen, the contractor pays the difference
The net result is price certainty.
This structure:
Avoids early purchasing and storage
Preserves supplier relationships
Keeps procurement flexible
Allows price risk to be managed separately from delivery risk
It is a model already used widely in energy, metals, and agriculture. Applied carefully, it gives construction businesses access to the same commercial discipline without turning them into traders or speculators.