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Sharp fall in price of construction materials, demand remains low
At present, the construction material market has shrunk after a sharp rise in previous months. Although prices of construction materials such as steel, cement, and bricks have gone down, they have not stimulated the consumers’ demand.
In early July, the price of steel increased sharply, by VND21 million per tonne in the south and VND19.5 million per tonne in the north. At present, the price has fallen to VND13million per tonne.
Gloomy market
According to the Vietnam Steel Association, although the price of steel has dropped remarkably, there is no huge demand for steel in the market. In the previous months, consumption was at more than 300,000 tonnes per month on average which fell to 110,000 tonnes per month in September. Currently, the amount of steel in stock has reached nearly 500,000 tonnes.
In May, the price of cement in the south plummetted to VND1.8 million per tonne and many shop owners ran out of stock and had to turn away customers. Until now, the price of cement has decreased by VND850,000-VND900,000 per tonne in the north and by VND1.2 million-1.25 million per tonne in the south. However, the consumption demand for this item has not increased remarkably as was anticipated by stores and agents.
In response to questions from VOVNews reporter, Nguyen Hung Lam, director of Tuan Lam Co, Ltd - a construction material company - said that there has been a sharp decline in the consumption of cement and construction steel from enterprises.
The price of enamelled tiles at the moment has also fallen to VND5,00 per square metre and that of construction bricks has dropped by VND50 a piece while the price of gold dust also dropped VND7,000 per cubic metre.
According to a survey conducted by reporters, the number of customers purchasing construction materials has not increased in Hanoi. Most of the shop owners said with a large volume of goods remaining in store, they would suffer greater losses when prices continued to slump further.
Regarding the reasons for decline in the price of steel, Pham Chi Cuong, President of the Vietnam Steel Association said to create capital, commercial and production enterprises have had to reduce the selling price, even if they must suffer losses in order to pay interest rates to banks.
Also after the wholesale price of steel ingots rocketted up to US$1,200 per tonne, and then fell sharply by US$500 per tonne, the retail decreased accordingly.
In addition, many enterprises, which have collected goods and waited for higher prices have had to sell out all their goods to pay interest rates to banks, leading to a remarkable rise in the demand for steel.
Representatives from the Vietnam Cement Industrial Corporation also explained that the consumption of cement tends to decrase due to the rainy season in southern provinces.
In addition, the impelementation of the government’s eight groups of solutions to curb inflation has slowed down or delayed the progress of many construction projects.
An economic expert said that when the real estate market decreases, the consumption of construction materials is affected accordingly. In this situation, enterprises should reduce prices and carry out promotional programmes to stimulate consumers’ demand. It is forecast that the construction material market will become hectic again after the rainy season ends.
VOV
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