Danube reveals Chinese building materials imports to cost 10 - 15 per cent higher

Costs of Chinese imports particularly plywood/MDF have witnessed sharp increases on account of the reduction of rebates granted by the Chinese government to factory owners and export companies down to 5 from the previous 11 per cent. Citing reliable sources in the Chinese market, Danube further revealed that the remaining 5 per cent rebate would be removed in August 2007, which should result to an overall increase in costs by 11 per cent.

China currently supplies almost one-third of the materials in the booming construction industry of the UAE, which has a total value of USD 300 million in active construction projects. In addition to the expected price increases of Chinese products, freight charges per 40-inch container have also ballooned in the past two months to USD 2,300-2,800 in June from the previous USD 1,300-1,500 in May. Shipments costs from China have increased to USD 3,000 per container in some destinations with costs expected to further go up by as much as 10 per cent in August and another 5 per cent in September or October 2007.

"We have established long-term relations with major suppliers in the Chinese market who have informed us about the new rebate policy of their government. We anticipate that the real estate and construction industry will feel a significant impact of the reduced rebates and the rising freight costs in the coming months, considering that the country's bulk of construction and building materials are imported from China,"

said Rizwan Sajan, Chairman of Danube.

The costs of other Chinese building materials including steel, sanitary and hardware materials have also been subject to similar regulation changes. The rebate on these products granted to factory owners and export companies was previously 13 per cent but has been reduced since April 2007. As such, this has affected shipments and has led to an overall 8 per cent increase in prices.

"On our part, we currently import 550 containers every month from our major partners in China, and price changes in their markets coupled with soaring freight charges in turn affect the prices of the products we offer to our clients, particularly developers and contractors. We are set to leverage our extensive relations in China as well as our present stock in order to cushion the impact of the expected price increases and gradually implement new cost prices in line with our commitment to our customers," added Sajan.

Danube is one of the largest building suppliers in the UAE and the region with an extensive portfolio of 10,000 selections ranging from MDF, plywood, timber, laminates, veneers to sanitary fittings, hardware, ironmongery, aluminum and glass among others. In 2004, the company began its operations in Jebel Ali with a 19,000 sq. m. warehouse cum office, which serves as its regional hub and caters to booming markets in UAE, Oman, Bahrain and India.