7 engines jump in prices of building materials – Economic – UAE economy

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The prices of basic building materials in the local market have increased significantly since the beginning of this year compared to the last year that witnessed various increases, and businessmen running construction companies attributed the collective rise in the prices of basic building materials to the combination of 7 factors and reasons, which are the high demand in the market, and the presentation of A basket of new projects in infrastructure and the resumption of business in multi-use projects, the increase in energy costs in production processes, the scarcity of skilled workers, the scarcity of raw materials in the market, the rise in the prices of raw materials globally, especially those associated with global stock exchanges, in addition to the high cost of shipping.

Basic materials

The current year witnessed a clear increase in the prices of basic building materials compared to last year, at a rate of 8% for cement and 13% for steel reinforcement. The increases in cement prices ranged between 8.5% and 7.5% at a price of 15 dirhams for a bag weighing fifty kilograms, compared to 13.5% Dirhams per bag during the past year, while white cement kept the same price, which is estimated at 34 dirhams, for a 50 kg bag, while gypsum decreased its price by 2%, bringing its price to 8.8 dirhams for a bag weighing 25 kg.

Concrete

The price of ready-mixed concrete increased slightly, between 1.7% from 241 to 245 dirhams per cubic meter of ordinary Portland grade 40, and from 246 to 250 dirhams per cubic meter anti-salt Newton 40. As for black sand, he saw a decrease of 0.4% to 913 dirhams per 20 meters Cubic sand compared to 917 dirhams, and for white sand, it was delayed to 9.4% and reached 800 dirhams per 20 cubic meters, and red sand by -2.8% to reach 563 per unit, and the amount of increase in gravel varied between 5.6 and 9%, as the crushed concrete aggregate increased 4 / 3 inch from 975 dirhams per 20 cubic meters at the beginning of the year to 1063, crushed concrete gravel 3/8 inch from 1033 to 1125 dirhams, and crushed concrete gravel 16/3 inch from 1196 to 1263 dirhams Per 20 cubic meters.

High demand

Sources working in construction and construction revealed that the increase in cement prices came as a result of the high demand compared to the steady production capacity of local factories and the strength of export to foreign markets, in addition to the increase in operational costs due to the high cost of used energy sources. The current production capacity of state factories reaches 25 million tons every year, which is almost twice the volume of demand, as the local demand for cement is estimated at 12 and 13 million tons, which exposes the factories to difficult choices. Cement companies keep pace with the continued strength of the local building and construction market, with the presentation of many infrastructure development projects with the proximity of the Expo.

The sources said that the export rates from local factories witnessed a strong start, for several reasons, the most prominent of which is the openness to new markets that witness progress in demand despite the increasing cost of local manufacturing, and despite the high energy prices, international factories are able to produce about one million tons every year, which is The usual size of the production of any factory, but the current conditions dictate the operation of factories with less energy, as they produce about 60% of their operational capacity.

2600 dirhams

Iron prices in the UAE witnessed a significant increase in early 2021, reaching between 2,400 and 2,600 dirhams per ton, according to the Dubai Statistics Center, with an increase ranging between 12 and 13%, as the price of brominated iron rose 6-8 mm 13% to reach about 2,235 dirhams per ton By comparison, 1976 dirhams per ton, and brominated iron (10-25 mm) increased 12% from 1961 to 2,191 dirhams per ton, and the amounts of floor iron grates of sizes 6 and 7 mm amounted to 7 and 5% per square foot.

The sources emphasized that the rise in iron is related to a number of internal and external causes, most notably the cost of energy in factories, the scarcity of foreign workers, the scarcity of raw materials for operation, the cost of shipping and the volume of supply and demand governed by the stock exchanges.

Officials and contracting company heads attributed the huge rise in iron prices and the arrival of a ton to 2,600 dirhams to the high prices of raw materials in international markets, and indicated that the contracting sector in the country is able to overcome the “Covid 19” pandemic, explaining that the demand for large construction projects has declined in the period. The current is normal due to the repercussions of the pandemic.

They emphasized that the wise leadership issued many decisions at the beginning of the pandemic that mitigated the impact of the crisis, including the exclusion of the contracting sector from restrictions on movement, without prejudice to the precautionary measures, noting that the steel companies, factories and contracting companies have the expertise that enables them to face the crisis.

Resuscitation dose

Dr. Ahmed Saif Belhasa, Chairman of the Belhasa Holding Group, said that the government’s role is clear and clear in providing support and incentives to the business community, and this thus yields a strong momentum to enable markets, including the construction sector and the real estate development industry, to receive a revitalizing dose that takes it to the start of a new journey of growth and prosperity.

Official support

Engineer Sami Al-Farra, Head of Modular Design for Engineering Consultancy, said: The construction and real estate sectors are among the most important pillars of recovery from the effects and repercussions of the Corona pandemic, especially since this vital sector has not stopped working and its workers have exercised the highest levels of commitment and discipline, pointing out that the continuation of operating companies In them, official efforts are strengthened to continue the uniqueness of the UAE in formulating its distinctive experience in overcoming the challenges of the epidemic.

Projects cost

Eng. Emad Azmy, President of ASGC Construction, stressed the need for the construction sector to prepare for the post-pandemic by adopting more modern construction technologies, explaining that these technologies contribute to reducing the cost of projects, especially those related to innovative solutions in the construction industry. And the building is for optimal use of energy efficiency.

High elasticity

Ali bin Haider, Chairman of the Board of Directors of Al-Orouba Contracting, pointed out that the construction, contracting and building materials sector is of strategic importance in all circumstances, and the sector has shown high flexibility in dealing and interacting with the emergency situations imposed by the Corona virus with its full commitment to the preventive measures imposed by the competent authorities to protect The health and safety of the population in general and workers in the construction sector in particular, as they are among the vital sectors that are excluded from some procedures, and definitely covered by the rest of the preventive measures.

Global market

Saeed Ghamran Al-Rumaithi, CEO of Emirates Steel, stated that the rise in iron prices in the local market is expected due to the increase in raw material prices in the global market, explaining that the decline in purchase demand at the present time due to winter and weather conditions, in addition to the Corona pandemic.

He added that the great increase in iron prices appeared with the month of January, when raw materials witnessed a significant increase in the international markets, and this is something we have no part in, and it is natural for the local market to be affected by what is happening in the world.

Weak demand

In contrast to the rest of the opinions that link the rise in prices and the increase in demand, Muhammad Salem Al-Afari, Executive Vice President at Emirates Steel, confirmed that the company has a complete non-functional steel factory due to weak demand, indicating that the local market absorbs all the company’s products, pointing out that There is a clear drop in iron purchase demand due to the suspension or postponement of some projects due to the pandemic. He said that the rise in iron prices did not bring any profits to the company, explaining that the increase in the prices of raw materials worldwide has led to an increase in the cost of manufacturing and that the consumer will bear part of the increase, and this is a natural thing.

He added, “We tried as much as possible to reduce the consumer, and if the increase did not occur, the company will incur losses, and no global company can bear the emergency increase alone in the global markets.” He explained that the raw material for the iron industry, “scrap”, is imported from abroad and rose from 280 dollars in September 2020 to about 500 dollars per ton, with an increase of close to 100% within less than 6 months, which contributed to the increase in the cost of a ton of iron in the market. The local is now between 2,400 and 2,600 dirhams.

On prices during the coming period, Al-Afari revealed that China is witnessing a state of calm during the current period due to the holiday season, and with the return of activity, projects may start there, and thus the increase in global prices will continue, and we will be affected by that.

Supply and demand

Ahmed Khalaf Al Mazrouei, head of the Contractors Association in Abu Dhabi, confirmed that the prices of building materials are affected by the global market, and in the end it is a free market subject to supply and demand, pointing out that iron prices range between 2,400 and 2,600 per ton, and cement prices vary according to the quality and the manufacturer, pointing to Cement prices have not witnessed a major change like iron, which depends on raw materials from abroad, and these prices are governed by the global market.

Governmental decisions

Ahmed Ali Musa Al Naqbi, CEO of Ali Moussa Holding Group, explained that the sector was severely affected by the pandemic that affected the whole world, stressing that the wise leadership issued many decisions at the beginning of the pandemic mitigating the impact of the crisis, and mentioned that the sector faced many challenges, and there are projects that faced Significant shortage of liquidity. He added that at the beginning of the pandemic, the situation was unclear, and there was a significant increase in the prices of building materials due to the stopping of shipping movement, and this caused an increase in the prices of building materials, especially imported materials, including iron, as well as the price of wood, while local building materials were not affected, such as cement. It is expected that prices will decline during the coming period with the return of freight movement.

Motors:

01 high demand
02 Launching new projects
03 Increasing energy costs
04 Scarcity of skilled workers
05 Scarcity of raw materials
06 Primary material price growth
07 Increase shipping cost

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