Construction materials market recovers slowly

Demand for housing repair and construction increases slowly

According to Kinh te & Do thi reporters at steel dealers in Hanoi, steel prices have been continuously adjusted up since the beginning of October and are currently being sold at around 14 million VND/ton. Since October 2, steel prices have been adjusted up 4 times in a row for CB240 coil steel and D10 CB300 ribbed bars.

In particular, Hoa Phat steel in the Northern market, with CB240 rolled steel increased by 310,000 VND/ton, currently fluctuating at 13.8 million VND/ton; D10 CB300 ribbed steel increased by 410,000 VND/ton, priced at nearly 14 million VND/ton.

For Viet Duc Steel, CB240 rolled steel is priced at 13.6 million VND/ton; D10 CB300 ribbed steel is priced at over 14 million VND/ton. For VAS Steel brand, CB240 rolled steel and D10 CB300 ribbed steel are priced at 13.85 million VND/ton and 14 million VND/ton, respectively.

Construction material production at Viet Duc Steel Joint Stock Company, Binh Xuyen Industrial Park (Vinh Phuc). Photo: Tran Viet

According to the Vietnam Steel Association (VSA), the Vietnamese steel market is still recovering positively in terms of domestic and export demand. Total steel consumption of all types in the first 9 months of 2024 increased by 14.5% over the same period in 2023. Total construction steel output consumed in the first 9 months of the year also increased by 12.5% ​​over the same period last year, of which domestic consumption reached over 7.1 million tons, up 11.1% over the same period.

Galvanized steel market in the first 9 months of 2024, the total export output of galvanized steel reached nearly 2.4 million tons, a sharp increase of 44% over the same period in 2023. This has created conditions for cold rolling enterprises to boost the consumption of genuine steel and processing.

Meanwhile, other construction materials such as cement still maintain their selling prices from 220,000 - 270,000 VND/ton. Up to now, cement prices have remained the same compared to the last price increase in June 2022.

Dealer owners said that the demand for repairing and building new houses has increased compared to the time before storm No. 3 made landfall in the North, however, because the prices of some construction materials have increased, the demand is not as great as expected.

Mr. Nguyen Van Dung - owner of a construction materials store on Nguyen Phong Sac Street (Cau Giay District, Hanoi) said that although it is currently the construction season, there are few projects starting so the consumption of goods is slow, down 10 - 20% compared to previous years.

"The increase in the price of construction materials, including steel, has had a significant impact on the construction of individual houses in residential areas. Many families have had to recalculate their house construction, because the cost can increase from several million to tens of millions of dong," said Mr. Nguyen Van Dung.

Prices may continue to rise

Under the impact of rising electricity prices, many experts say this could affect businesses in the construction materials industry, because electricity costs account for a large proportion of production and business activities (steel 10%, cement 14-15%).

While demand is not high, purchasing power is still low and inventories are still high, posing a problem for businesses in adjusting operating costs. At the same time, construction material prices in the second half of 2024 will continue to increase under the condition that the economy has stabilized and the construction industry is "revived".

According to a representative of the Vietnam Cement Corporation (Vicem), the increase in electricity prices is within the company's plan. Although it is affected by many other input costs, the increase in electricity prices is considered inevitable in the context of the electricity industry facing difficulties due to high input production costs such as coal and oil. The plan also takes into account the increase in electricity prices and the implementation of further cost reduction and more efficient use of electricity sources.

Meanwhile, for the steel industry, Master Pham Ngoc Trung - an expert in the field of construction materials, assessed that electricity is considered one of the main energy consumption indicators in the steel production process, especially in the steel smelting stage using electric furnaces (electricity costs account for 7 - 8% in steel production).

Therefore, every time electricity prices increase, steel enterprises face pressure to increase production costs. In addition, when electricity prices increase, other input costs often increase, which will certainly have a significant impact on production costs.

"Enterprises need to minimize input costs to minimize impacts; apply measures to save electricity and use energy efficiently (production during off-peak hours, increase coal spraying and oxygen blowing during steelmaking...). This action not only helps minimize the impact of increasing electricity prices but also enhances the competitiveness of steel enterprises. Product quality increases, prices are more reasonable" - Mr. Pham Ngoc Trung said.

According to a recent report by Shinhan Securities Vietnam, domestic steel output has improved thanks to the recovery in domestic market demand. Domestic steel production will continue to grow thanks to the improvement of the economy and the return of the real estate market. The Law on Real Estate Business, the Housing Law and the Land Law taking effect soon, along with the promotion of public investment, will be the driving force for steel demand to continue to grow in the period of 2025 - 2026.

Experts from Shinhan Securities Company also acknowledged that the recent increase in steel prices has coincided with the increase in Chinese steel prices, as the Chinese government has introduced more drastic policies to revive the real estate market. Import and export activities have grown strongly in the first 8 months of 2024, reaching 8.88 million tons, up 20.7%, of which construction steel and galvanized steel increased by 34% and 47%, respectively. Vietnam's steel product imports reached about 10.75 million tons, up 35.5% over the same period.

 

Vietnam Electricity Group (EVN) has issued Decision No. 1046/QD-EVN dated October 11, 2024 on adjusting the average retail electricity price. Accordingly, the average retail electricity price will increase by 4.8%. Calculations by Vietnam Electricity Group (EVN) show that the average additional cost per month for the group of customers using electricity for business services is VND 247,000; production VND 499,000 and administrative services VND 91,000.

Source: https://kinhtedothi.vn/thi-truong-vat-lieu-xay-dung-phuc-hoi-cham.html