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Building material market heating up on greater civil demand   2009-05-29 - VietNamNet

The construction material market has been heating up after half a year of slow sales. Producers and suppliers are hurrying to raise sale prices, even though they still have big stocks.

 

Sales push from individual demand

 

 
Hung, a big contractor specialising in civil works, said that his three groups of workers have been extraordinarily busy over the last month as many orders have come from individual clients.

 

Individual clients prove to be the main source warming up the construction material market. Though civil works consume fewer construction materials than commercial, industrial or infrastructure projects, the large number of works still has been able to spark the market.

 

“People are rushing to build or upgrade houses right now, when construction material prices are low. They fear that prices will rise in a couple of months,” Hung said.

 

Statistics show that sales of steel and cement have increased sharply over the last one month. 430,000 tonnes of steel were sold in April, an increase of 20.5 percent over March. Meanwhile, 4.49 million tonnes of cement were sold, an increase of 230,000 tonnes more than during the previous month.

 

Other products like bricks, tiles, sand and interior bathroom materials have also seen sales increase. Some material producers have reported they have cleared ½ of their stocks.

 

The increased sales of construction materials are continuing in May. Both the Vietnam Steel Association and Ministry of Construction have estimated the sale of 360,000 tonnes of steel in May, an increase of 15 percent over May last year, and 4.11 million tonnes of cement, up by 11 percent.

 

The owner of the construction material shop at No 30B Cat Linh street said that though the prices of some interior bathroom materials have increased by 10 percent since March 1, he still has many clients these days because the demand for building houses has been increasing.

 

Pham Sy Liem, Deputy Chairman of the Vietnam Construction Federation, has forecast that the demand will rise further when big projects restart in a few months.

 

Suppliers hurrying to raise prices despite big stocks

 

Though the demand for construction materials has just begun increasing, and producers still have big stocks, suppliers are still raising sale prices.

 

The owner of Huyen Anh Construction Shop at No 181 De La Thanh said that since the beginning of April, Chinfon Hai Phong and But Son cement both have increased by 30,000 dong per tonne. Chinfon is now selling at 1,080,000 dong per tonne, while But Son at 1.1 million dong. Hoang Thach brand-name cement is also selling at some 1.1 million dong per tonne

 

According to the Ministry of Construction, though producers still have 0.36 million tonnes of cement in stock and 1.02 million tonnes of clinker, the cement price is still likely to increase slightly in the coming days.

 

Doan Van Can, distribution officer of Hung Hien Trade and Service Company at No 36 Cat Linh street, said that people should place orders one or two months in advance, because supply will be shorter from now to the end of the year.

 

The steel price has surprisingly increased four times in the past month despite the big stocks. By the end of May 2009, there were still 160,000 tonnes of finished steel and 280,000 tonnes of ingot steel in stock.

 

After the multiple price increases, steel has become 6.2 percent more expensive, or 600,000 dong per tonne.

 

According to the Ministry of Industry and Trade, the steel price has increased by 30-50,000 per steel bar on average; coil steel is selling at 11-11.2 million dong per tonne, while steel bar less than 12 million.

 

Construction material producers are attributing the higher prices to higher input material prices.

 

The Ministry of Construction said that the higher electricity and coal prices have forced producers to raise sale prices. Meanwhile, the Vietnam Steel Association said that steel producers have raised sale prices to cover the losses they incurred before due to selling at below production cost.



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