Construction sector laboring under gravel ban

The China Post staff

China’s ban on gravel exports to Taiwan starting March 1 will deal a serious blow to the local construction industry and the realty market, as the prices of gravel and pre-mixed concrete will be forced to rise significantly and the completion schedule for home-construction projects will be postponed, according to industry sources.

Sources said that in two weeks, several major pre-mixed concrete firms may become incapable of maintaining a normal supply to clients due to the shortage of gravel caused by China’s ban on gravel exports to the island. As a result, one fourth of on-going housing projects will have to postpone their completion schedule, according to industry insiders.

Chen Tse-hsiung, general manager of a major pre-mixed concrete firm, pointed out that his company will run out of gravel inventory by the end of March and has yet to find a solution to the problem.

The expected shortage will boost concrete prices. Hung Chen-chi, standing board director of Taiwan Building Industry Association, said that on top of the 50 percent concrete price hike over the past year, the price will rise 15-20 percent further.

Meanwhile, steel bar prices have hit a 16-year high of NT$25,000 per metric ton now, compared with NT$10,000 two years ago. As a result, the overall construction costs may go up 30 percent starting next month.

Currently, domestic gravel supply is only 4.5 million cubic meters per month, compared with a demand of 5.7 million cubic meters.

The remaining 1.2 million were supplied by China.

If China continues to ban gravel exports to Taiwan, the domestic gravel supply shortfall will run up to 12 million cubic meters by the end of the year, according to Chen Tai-hsiung, deputy director of the mining department of the Ministry of Economic Affairs. Chen pointed out in a press conference on Feb. 28 that officials of China’s Taiwan Affairs Office said that Hong Kong, Taiwan, and Macao will be exempted from the gravel export ban. The Ministry of Commerce of China already announced resumption of gravel export to Hong Kong and Macao yesterday, but has yet to take a similar move for Taiwan.

Chen believed that eventually China will also resume gravel supply to Taiwan, so long as Taiwan can effectively control the re-exporting of Chinese gravel to third countries.

Chen reported that the Mainland Affairs Council of the Executive Yuan has authorized the Taiwan External Trade Development Council (TAITRA) to negotiate with its Chinese counterpart for the resumption of gravel export to Taiwan, but TAITRA has yet to receive notification from China for the timing and location of the talks, allegedly due to the on-going annual session of China’s National People’s Congress in Beijing.

Chen emphasized that the Taiwanese government is adopting a number of measures to alleviate the problem, including increasing domestic supply by intensifying dredging of local rivers and requiring domestic gravel firms to release their inventories.

In addition, three domestic gravel firms have set up plants in the Philippines, which are scheduled to export gravel to Taiwan from July 1, increasing supply to 2 million cubic meters by year end.