Domestic market turns back to expensive construction materials

Stockpiles at construction material retailers and producers in Ho Chi Minh City have been getting higher for five consecutive months as consumers were shunned by increasing prices.

Nguyen Thi Xuan, owner of a construction material store in Thu Duc District, said sales at the store since April has only reached half of that in previous months.

During the first quarter this year and before, the store consumed around 100 tons of steel and 3,000 sacks of cement every month, but since April, only a few people came each day to buy a little amount of materials to fix their houses, Xuan said.

Tran Minh Huan, director of Hoang Minh Construction Company, Ltd. in District 12, said the company has only sold a quarter of steel and cement it imported for the past two months.

Huan said despite the slow trading, the company still has to pay the 2.2 percent of monthly bank interest and its debts are accumulating.

The same situation happened at major producers.

A source from Vietnam Cement Industry Corporation (VICEM) said that the group’s stockpile as of the end of June has reached 1.35 million tons.

Steel producers also reported nearly 600,000 tons left in stocks and most factories are now running only half of their capacity.

Representatives from VICEM and Vietnam Steel Association (VSA) said different factors have slowed down the business, including the policies about cutting public investment, the real estate market being frozen, and high inflation forcing people to limit their spending.

Both VSA and VICEM have turned to export markets to save their business.

Statistics from the groups showed that around 2.5 million tons of cement products and around 133,000 tons of steel worth US$7 billion have been exported during the first seven months this year.

But they said that the solution is just temporary as the markets do not generate as high value as domestic ones.

Although the business is lagging, the prices of major construction materials are still kept at high levels as producers blamed increasing costs.

The prices of steel and cement have been raised three times this year, by VND2.5-3 million (US$120-144) a ton and VND360,000 a ton, respectively.

That has driven the current retail prices of cement to VND1.2-1.45 million a ton and those of steel to VND15.5-15.8 million a ton.

Meanwhile, each cubic meter of sand has been charged for an extra VND10,000-20,000.

Some experts have suggested that the government adjust its monetary policies and help construction materials assess low-interest loans, in order to prevent the production from coming to a standstill. – SGGP