No return for high building material prices

The Phnom Penh Post
http://www.phnompenhpost.com/

Written by Soeun Say
Wednesday, 20 May 2009

PRICES for construction materials have edged up slightly in recent months amid a small rally in construction activity but suppliers say the prices seen at the height of the building boom last year are unlikely to be back anytime soon.

Ey Keang, sales manager at Chip Mong Import Export Construction Co, a large importer of steel and other construction materials from Vietnam, said steel prices began increasing again in March, reaching between $590 and $600 per tonne last week, up around $10 per tonne from the beginning of the year. She refused to disclose how much the company paid for its steel in Vietnam.

But despite a slight rebound in construction sector activity, demand was well below that seen at the height of the building boom, she said. "Our company was very busy during Cambodia's property boom in 2006 and 2007, but now our business is not running as well."

Despite the reported rise in prices, figures from the Ministry of Commerce show steel prices had actually declined 0.34 percent from the beginning of the year to 2,368 riels per kilogram on May 6, or around $592 per tonne. On October 30 last year, steel was retailing for 3,523 riels per kilogram, or around $880.75 per tonne.

Cement prices were down 0.56 percent from the beginning of the year to 19,736 riels (almost $5) on May 6 for a 50-kilogram sack, slightly up on 19,551 riels on October 30.

Chhean Dara, project manager at the Happiness City development in Phnom Penh, said it was a good time for developers to build or stockpile supplies.

"Construction materials have increased a little bit from the beginning of the year, but the prices are low compared to early last year, he said.

"It is a good opportunity for developers who want to construct homes for sale, but I don't think there will be strong demand for materials because construction activity is still depressed.

"We cannot buy construction materials to build even though prices are low because our project has not sold," he said.

The Happiness City development was currently using just 40 tonnes of steel per month and between 150 and 200 tonnes of cement, well down on the 150 to 200 tonnes of steel and 500 tonnes of cement used each month in 2007 and early 2008, he said.