Danube optimistic about positive effects of price correction for regional construction industry

Building materials prices in Middle East witness 15 per cent rise in April 2009

Danube optimistic about positive effects of price correction for regional construction industry

May 10, 2009

The prices of various building materials in the Middle East have risen by as much as 15 per cent in April 2009 as compared to the first quarter, with the price of steel witnessing the steepest hike from USD 430 to USD 500 per tonne. In line with this, Danube Building Materials, the leader in construction, building materials and shop fitting industries, has revealed its optimism about the positive effects of the major correction phase that is sweeping the entire Middle East construction market, which is an indication that the industry is reshaping to take on a stronger stance towards recovery. Company officials also disclosed that they have observed increased buying activity within the building materials sector in April.

The price hike, which is expected to encourage a more upbeat trade atmosphere in the market, is the result of the increase in building material imports following a slowdown in regional orders from October 2008 to February 2009 due to overstocking. According to the latest price indexes maintained by Danube, products whose prices jumped since last month include medium density fibreboards (MDFs), which currently wholesale at USD 220 per cu. m. from USD 200 in March; and white wood, which rose by 10 per cent to USD 210 per cu. m. from USD 190. In addition, freight costs have also increased from USD 300 to USD 650 for a 20-feet container in March, while a 40-feet container now costs USD 800 from previous rates of USD 550.

“The current correction in the real estate and property sectors is driving the shift in the prices of construction materials, which will eventually lead to a healthier market with more stable growth opportunities in the future,” said Rizwan Sajan, Chairman, Danube Building Materials. “As the market leader, we have identified that today’s market scenario gives us an exceptional opportunity to supply our top-quality products to support the continuous construction of major projects and developments across the region. We are also anticipating further increases until prices reach a stable level.”

Danube’s price index also revealed that average rates for the most basic building materials are as follows: steel props at AED 45 per piece, cement at AED 16 per bag, clear float glass (6mm) at AED 23 per sq. m., and aluminum profiles at AED 19 per kilogram. A survey of the prices of imported wood products have also reflected a dip, with scaffolding planks sold at an average of AED 55 per piece, while Red Meranti from West Malaysia selling at AED 2,750 per tonne, European Whitewood at AED 925 per cu. m., Russian Beech wood at AED 2,750 per cu. m. and KINGPLUS Film Faced plywood at AED 125 per sheet.

“Our recent foray into steel, aluminum and glass manufacturing puts us in a strategic position to maximise the movement in market prices of these products and thereby drive our growth amidst the challenges of the global economic crisis. Through our plans to further expand our operations and product offerings, we are hoping to do our part in pushing the growth of both the construction and real estate sectors,” concluded Sajan.

Danube operates from its head offices in Dubai - a 285,000 square foot facility in Jafza north and 365,000 square foot area in Jafza south. The company offers top-quality products including medium density fibreboards (MDFs), plywood boards, timber, veneers, laminates, cladding, steel, kitchen and sanitary wares, glass, hardware, electrical, aluminum, doors, floorings, adhesives, ceilings, paints, edge bondings, fire solutions, and high quality construction tools.