Demands of construction materials have stagnated in recent months in Japan despite the brisk construction investment. Sales of such materials as cement and ready-mixed concrete fell below the estimated level in fiscal 2014 and the demands are not likely to pick up in 2015. It is considered partly because rising construction costs are keeping developers from launching construction works. Construction contractors are getting more careful with receiving new orders due to large amount of unfinished works, which is thought to be one of the factors as well.

The amount of cement sold in Japan dropped in May by 10.3% from the same month last year to 3.26 million tons, says Japan Cement Association. Shipment of ready-mixed concrete in May also fell by 11.2% from a year earlier to 6.81 million m3, seeing 8 months consecutive decline according to an industry group. Production of asphalt mixtures in fiscal 2014 decreased for the first time in four years by 10.5% from the previous year. As this trend continued for the first two months of the current fiscal year, an official of the industry group fears that the outlook of the market is getting unpredictable.

Japanese construction industry has experienced a boom after a long stagnation since the 2011 Earthquake and the following reconstruction works along with other contributing factors such as the administration’s policy to increase public spending, increasing private investments mirroring the economic recovery and the successful bid to host the 2020 Olympic Games in Tokyo. Some people in the industry point out that the contractors and project owners are responsible for slow demands of materials in spite of the improving circumstances.

Some property developers postpone orders and groundbreaking to wait for the right timing because of a sharp rise of labor and materials prices. Many construction firms are hardly ready to receive new orders since they prioritize piled-up works contracted in the earlier terms especially in urban regions.

When would the material market pick up? Some expect the demands could recover when massive projects such as Tokyo’s new wholesale markets in Toyosu and the Olympic facilities start in a full swing, while some fear the market will likely remain sluggish until the end of the year. (2015/07/10)