“We must be on alert, as Maersk, the second largest shipping company, will announce the suspension of its services in Russian ports, an action that would further weaken the global supply chain, thus generating significant delays in ongoing construction projects, and increasing their costs,” declared the president of ACOPROVI.
SANTO DOMINGO – Despite the special situation facing the construction sector due to the war in Ukraine, President Luis Abinader, in his speech last Monday, did not announce any relief measures that would directly impact this sector, which has already seen price increases due to the conflict that is keeping the world economy in a state of uncertainty.
“It left me with expectations; I didn’t notice anything directly that favored construction, except for the issue of fuel,” said Jochimin Pérez Iglesias, of Constructora Jprez SRL.
Last week the price of a bundle of steel increased by three thousand pesos in the local market, attributed to the war in Ukraine, from where the country imports more than 30% of its iron and cast steel.
“More measures were needed; I think the construction sector should have been impacted more directly,” declared Rafael Durán of Inversiones SBDS; although he understands that the fuel price freeze will keep the transport of materials and equipment stable.
However, he clarifies that with regard to the price of steel, these measures will not stop its rise, since it does not depend on the national market.
Regarding housing prices, the SBDS representative explained that they will always rise whenever material costs increase because when builders calculate actual costs, they must adjust them to maintain initial profit margins. "We're not talking about price gouging because something has gone up," he said, "but rather passing on the impact of the actual cost increase, which the client obviously has to pay because they are the ones who benefit from that added value.".
Landy Colón, president of the Cibao Association of Housing Developers and Builders (Aprocovici), said that the measures announced by the president are just political promises and acknowledged the vulnerable situation in which the construction sector currently finds itself, given the conflict between Russia and Ukraine
ACOPROVI says it's a special situation
Jorge Montalvo, president of the Association of Housing Builders (ACOPROVI), understands that the international challenges brought about by the disputes between Russia and Ukraine impact the whole world and the Dominican Republic is no exception.
“Taking into account that our country imports 36.5% of the iron and cast steel we consume from Ukraine, according to the spokesperson and director of Strategy and Government Communication, Homero Figueroa.”.
He said that in recent weeks “we have seen a large increase in the cost of different construction materials internationally, such as aluminum and nickel, metals that depend heavily on Russian exports, reaching an approximate price of US$4 in the case of aluminum, and nickel exceeding US$26 per ton, which means historic increases in both cases, a fact that could contribute to the slowdown of all construction processes in the coming months.”.
Montalvo noted that the increase in material prices is a reality that has persisted since the beginning of the pandemic, which, combined with current international events, could have an even greater effect on maritime transport logistics and the increase in commodities internationally, a situation that directly affects trade between countries.
“This would raise the cost of products imported from Russia and Ukraine, such as corn, natural gas, oil, steel, among others. In the case of steel, we see that in the first week of the conflict its price increased by RD$2,000.00; a bundle of rebar went from RD$72,000.00 to RD$74,000.00.”.
He argued that, given the current scenario, "we are in the midst of a special situation that requires special measures on a temporary basis so that we can face these moments from a strategic perspective.".
“We must be on alert, as Maersk, the second largest shipping company, will announce the suspension of its services in Russian ports, an action that would further weaken the global supply chain, thus generating significant delays in ongoing construction projects, and increasing their costs,” declared the president of ACOPROVI.
