Prices for Russian concrete to fall below production cost

24.04.2009 — News

THE SVERDLOVSK OBLAST.

Since autumn 2008, concrete production in Russia has fallen by 40%. After reducing the prices by 20% producers have to sell practically at cost.

According to experts, the prices for concrete may be expected to fall by 10% more, down to RUR 3,000/m3. The demand has fallen several fold as developers suspend projects through financing shortage. In the Sverdlovsk Oblast in 2009, construction of 38 residential buildings and 42 commercial properties has been frozen.

Entrance of foreign players to the Russian market has also contributed to the fall of prices. Domestic producers started having difficulties selling cement in mid-2008, when cheaper, although lower-quality, products from China and Turkey emerged in the market.

As Konstantin Selyanin, Head of the Urals branch of Accord Invest, said, only the state is able to save building material producers and developers. If the federal budget would finance housing for social programmes, construction in Russia would keep going, even though at a slow pace.

In the Sverdlovsk Oblast, only 15 companies make ready-mix concrete; their production volume in 2008 totalling 1M m3. In Russia, a total of 28M m3 of concrete were produced last year.