Construction Materials Forecast To Rise 7%

Prices of construction materials forecast to rise 7%

BNAGKOK: -- This year's prices of construction materials look set to continue last year's expansionary trend, but the rate of growth will be affected by the Chinese economic slowdown and global oil prices, according to a leading research centre.

The KASIKORN Research Centre (KRC) also warned that if the prices of construction materials went up above the projected 7.2 percent, house sales could be dealt a blow.

The prices of construction materials have risen steadily over the past two years, with 2004 recording a 10.2 percent growth rate, mainly driven by a 32 percent rise in the prices of steel products.

Noting the contributory factor played by effective cost management and a higher rate of production, the research centre also attributed the price rise to external factors, including the exponential global rise in the prices of consumer products and last year's Chinese economic growth rate of 9.5 percent.

China is the world's largest importer of copper and iron, and the world's second largest importer of oil after the US.

Nonetheless, the report noted that the Chinese authorities had introduced a number of measures designed to cool off economic expansion, and that this combined with high global oil prices was likely to push up the production cost of construction materials.

But the report also noted that domestic demand for construction materials remains high, and that although the rate of growth is not likely to be as prominent as last year, the prices of construction materials look set to rise by around 7.2 percent in 2005.

However, the research centre warned that an excessively high growth rate could lead housing firms to think twice before making investment in new housing, while potential buyers would be put off by high prices.

--TNA 2005-01-31