Construction materials sales heat up

Sales of steel and cement have increased sharply over the past month, according to trade associations. As many as 430,000 tonnes of steel were sold in April, an increase of 20.5 per cent over March, while 4.49 million tonnes of cement were sold, an increase of 230,000 tonnes.

The increased sales were continuing in May. Both the Viet Nam Steel Association and the Ministry of Construction have estimated that the month would see sales of 360,000 tonnes of steel, an increase of 15 per cent over May 2008, and 4.11 million tonnes of cement, an increase of 11 per cent.

Sales of brick, tile, sand and bathroom fixtures have also seen increases, with some vendors reporting that they have cleared half of their stocks.

A construction materials vendor on Cat Linh Street in Ha Noi said that though the prices of some bathroom fixtures had risen 10 per cent since March, demand was still rising as many customers were remodelling their homes.

Hung, a building contractor, confirmed that his three teams of workers had been extraordinarily busy over the last month on a number of projects. People were rushing to build or upgrade homes now before construction materials prices rose again, he said.

Viet Nam Construction Federation vice chairman Pham Sy Liem forecast that demand for construction materials would rise further when some major projects left idle during the economic crisis resumed in the coming months.

"The Government stimulus package, which seeks to foster investment in infrastructure construction and low-income housing projects, has sparked the construction materials market," said Liem.

Meanwhile, prices of construction materials are going up, despite abundant supplies.

The owner of the Huyen Anh Construction Shop on Ha Noi’s De La Thanh Street said that, since the beginning of April, Chinfon Hai Phong and But Son Cement had both raised prices by VND30,000 (US$1.70) per tonne. Chinfon is now selling at over VND1 million ($56.40) per tonne, while But Son was selling at VND1.1 million ($62).

According to the Ministry of Construction, cement producers still have 360,000 tonnes of cement in stock and over a million tonnes of clinker.

But Doan Van Can, distribution officer of Hung Hien Trade and Service Co on Cat Linh Street, said that people should place orders one or two months in advance, because supplies were going to get tighter between now and the end of the year.

Steel prices have also risen four times in the past month despite large stocks, increasing by a cumulative average of 6.2 per cent. By the end of May, producers still reported supplies of 160,000 tonnes of finished steel and 280,000 tonnes of ingot steel.

According to the Ministry of Industry and Trade, steel prices have increased by VND30-50,000 ($1.70-2.80) per steel bar on average. Coil steel was selling at VND11-11.2 million ($620-630) per tonne, the ministry said.

Construction material producers were attributing the higher prices to higher raw materials prices. Some steel producers were also raising prices to cover losses incurred earlier, when they sold product below cost, said Viet Nam Steel Association chairman Pham Chi Cuong. But, Cuong warned, if domestic producers raised prices further, they would be unable to compete with imported steel.