Building material prices Danube expects up to 40% yearly growth

Dubai Danube Building Materials eg:frp grating expects 30 to 40 per cent growth in revenues and profits every year.

"We expect 30 to 40 per cent growth every year. In 2008 our growth was 70 per cent but you can't sustain that," said Chairman Rizwan Sajan.

This growth will be due partly to the company's recent diversification into the home retail sphere with its Buildmart stores.

Danube aims to open 10 to 15 Buildmart stores by the end of next year across the UAE.

Sajan told Gulf News at the opening of the first store last week that the smaller stores would generate Dh5 million to Dh10 million per year with the bigger stores generating double this.

However, the main focus will continue to be on building materials. Prices have increased since the rocky first quarter and have since stabilised.

"Prices have been more or less stable for the last six months. There is not much variation — I would say not more than five to 10 per cent plus [or] minus, which is good enough. Normally there is a big variation, but for the last six months we have seen stability in prices," Sajan said.

At the end of last year, prices were at the top, and came down drastically when the full impact of the financial crisis was felt.

For example, steel rebar was $1,500 per tonne. It is now $500. The price of steel is fluctuating between $450 and $500 per tonne.

However, prices of some materials are forecast to rise by year-end.

"For the fourth quarter and the beginning of 2010 we are expecting some prices to go up, especially for wood because of the freight rate and the demand that has been created in this part of the world, in the GCC," said Sajan.

The current freight rate from China is about $1,000 for a container, which used to be $600 or $700.

"Now this freight will go to $1,500 for a container by the end of the year. If freight goes up, it means demand is there for the product, but it is not only freight but also commodity prices are also going up.