Might Building Materials Prices Stop Rising?

Might Building Materials Prices Stop Rising?

Photo: https://www.novostroy.ru/

Contrary to predictions, the prices in the Russian market of building materials are increasing. First of all, for lumber, PVC products, bricks, and concrete.

The dynamics of price growth for building materials are still exceeding the overall inflation rate by several times. It was 0.69% in June against May of this year. Moreover, it has already reached 6.5% in annual terms.

Taking into account this situation, the Federal Antimonopoly Service (FAS) initiated inspections of large producers of these products, construction organizations. In case of detection of violations of the antimonopoly legislation the agency “will take corresponding measures.”

Meanwhile, the Federal State Statistics Service (Rosstat) reported that prices for building materials had increased by 23.9% compared to June last year. As for price hikes in the current year, the costs for edged boards (15.7%), metal tiles (12.3%), Euroshield (6.8%), roofing felt (5.7%), chipboard and oriented chipboard (19.2%), red brick (4.6%) and window glass (3.7%) kept growing in June compared to the previous month. In fact, in June, the prices of construction materials in Russia went up. They increased by an average of 6.75% against May (the growth rate was 4.99% in May), while since the beginning of the current year the prices have increased by 19.63%.

Therefore, there is no surprise in the fact that the FAS instructed its regional departments to carry out checks of major construction companies and producers of basic building materials “in connection with the continuing rise in prices in the construction and related markets” concerning the reasons for the increase in prices for the relevant products in the first half of 2021.

The antimonopoly service also said that to control the prices of wood materials, PVC products, concrete, and bricks, the territorial bodies of the Federal Antimonopoly Service would conduct regular monitoring.

Deputy Prime Minister Marat Khusnullin had to inform Russian President Vladimir Putin about this significant increase in the cost of construction materials as part of the report on the implementation of the Eastern Polygon railway project. According to Khusnullin, although the implementation of this project is being carried out at a fast pace, several difficulties have already been detected. As Khusnullin underlined, the rising cost of building materials was one of the key points in the implementation of the project.

“I have instructed Glavgosexpertiza to strictly control the cost of construction materials,” said Khusnullin. “We have recalculated the cost of all additional volumes, which amounted to about 40 billion rubles ($539.6 mln) for the next three years.”

However, the situation with the prices of construction materials is likely to change for the better. According to the Ministry of Industry and Trade, the prices for building materials in the domestic market are expected to be more balanced due to the reduction of prices in foreign markets. The ministry’s report said that in June, the growth of prices for some kinds of building materials in the timber industry was “considerably higher than the average.” As prices in foreign markets, primarily in the U.S. and China, began to decline gradually, this led to adjustments concerning Russian export contracts.

“We expect that in the future, this circumstance will lead to more balanced prices on the domestic market as well,” the press service of the Ministry of Industry and Trade said.

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