Construction materials play an extremely important role in the construction industry; therefore, fluctuations in construction material prices always have a direct impact on construction projects. In reality, the construction market is often quite “unstable,” unpredictable, and full of potential risks…
1. Construction material prices fluctuate significantly
The final quarter of the old year and the first months of the new year are always considered the “peak season” for the construction materials market, when people's construction demand increases rapidly. This is also the time when the construction materials market becomes more active but also experiences the most fluctuations.
During this period, demand for construction materials typically increases by around 15–20% compared to other periods. According to Ms. Phuong, the owner of a construction materials store in Ho Chi Minh City, during the “construction season,” construction material prices generally increase by 5–20%, depending on the type of product. Nevertheless, stores remain crowded because construction demand is very high.
However, after the construction season ends, the market may fall into a state of “sluggishness.” Sales of most products, from iron and steel, cement, and bricks and tiles to interior furnishings, may decline by 50–60%. This significant difference in prices poses many risks for both customers and businesses.
2. Risk of losses for customers and businesses
a. For customers
During the peak season, sharply increased material prices force customers to spend more. However, due to the tendency to build “according to the season” or to prepare for the new year, consumers still accept paying higher prices. This directly affects people's finances and indirectly impacts the economy.
b. For businesses
When the market “declines,” manufacturing and distribution businesses face many difficulties. The workload decreases significantly due to fewer orders and investors delaying project schedules. The “frozen” market causes goods to remain in inventory without being sold, leading to losses and a decline in product quality.
3. Forecast for the construction materials market in 2020
According to experts, construction material prices in 2020 were expected to trend higher than in 2019. Factors affecting prices included:
- 🔹 Input material prices: Increased due to economic and tax issues, as well as the scarcity of natural resources such as sand and stone.
- 🔹 Construction density: The real estate market and infrastructure projects in 2020 were expected to improve, driving up demand for construction materials.
Specific forecasts for 3 key construction materials:
Natural sand supplies are scarce and insufficient to meet the growing demand for construction. Sand prices were forecast to increase significantly. Manufactured sand solutions were being implemented but had not yet achieved high effectiveness.
The relocation of cement factories outside cities caused disruptions in production, leading to temporary shortages. Therefore, an increase in cement prices was difficult to avoid.
New import and export policies made it more difficult to import raw materials, leading to a forecast increase in construction iron and steel prices in 2020.
In the face of unstable construction material prices, price stabilization is an urgent issue. Relevant authorities need to strengthen market management. As for consumers, become a “smart customer” by choosing the right time to build and reputable distributors to avoid unnecessary costs.
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