Brick sales best in 20 years

Posted On Monday, 30 August 2004 02:00 Published by eProp Commercial Property News
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Property boom driving demand for materials

john gomersallThe property boom, which has seen house prices rise by more than 20% in the past year and has sparked a rush to build new homes, has put pressure on producers of bricks and cement, boosting sales to levels not seen for 20 years or more.

Both cement and brick producers report extremely strong demand across the country and many have expanded production to meet what they expect will be a continuation of accelerated sales for some years.

Kevin Jacobs, executive director of the Clay Brick Association, says demand for most types of bricks is particularly strong, especially in areas such as Gauteng and the Eastern Cape.

The association does not keep statistics of sales, but Jacobs says that volumes for the year can be expected to be "substantially" higher than in 2003.

He says although there have been substantial peaks and troughs in the industry in the past, demand now is the highest it has been since about 1988.

At that time, many new brick factories were established, but by the time they had come into production, demand had tailed off and many had to be mothballed.

In the current boom, new factories are being established, but Jacobs points out that these could take some time to reach full production.

Jacobs says that with the property market booming, people are either extending existing properties or putting up new buildings.

There is also extensive upgrading of properties for the rental market, particularly in high-density areas such as Hillbrow and Berea in Johannesburg.

Peter du Trevou, managing director of Corobrik, one of the largest producers of face and paving bricks, says demand for bricks is high across the country and that sales in the first six months were about 20% higher than in the same period last year.

He says the main demand is for plaster and face bricks and in some cases delivery delays have had to be implemented.

Corobrik has begun expanding its production facilities in Polokwane, Johannesburg and the Free State.

The increased demand follows a rise in construction of residential and commercial properties as well as increased government spending on infrastructure.

Du Trevou does not expect sales to taper off until after the Soccer World Cup in 2010.

In line with the sharp increase in demand for bricks, cement sales are also surging ahead.

Sales in the first seven months of this year, excluding exports, have risen by 15.8% to 6.508 million tons from 5.619 million tons, while the total for the year is forecast at 11.051 million tons compared with actual sales of 9.905 million tons last year - an increase of 11.5%.

John Sheath, marketing manager at the Cement and Concrete Institute, says this is the fourth year of growth in the industry. In 1998, sales fell by 2.2%, plunged by a further 6% in 1999 and then by 0.2% in 2000.

The recovery began in 2000 with a 1.9% improvement, a further gain in 2002 of 5% and again in 2003 of 5.6%.

Sheath expects sales this year to post growth of between 13% and 15% with an improvement of between 8% and 10% next year.

Even though no major projects are being undertaken at present and the work on the Coega industrial development zone has been almost completed, Sheath says the demand for cement is being driven by the increase in residential, commercial and industrial building operations.

Additional construction that will result from winning the Soccer World Cup and the building of new tourism facilities should boost sales further.

This week, Pretoria Portland Cement (PPC) announced plans to modernise and expand one of its existing factories at a cost of R750-million in present-day terms.

When completed production will increase by about a million tons a year.

The programme, which does not include inflation, project management and commissioning costs and financing during construction, is set to be completed by 2008.

John Gomersall, chief executive of PPC, says the government's plan to increase fixed capital formation in infrastructure from around the present 17% of GDP to about 25%, justifies this investment.

 

Last modified on Monday, 21 October 2013 20:35

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