Brief Analysis of Current Situation on Polish Building Materials Market

Today, the slight increases in prices of building materials noted until the last quarter of 2006 are now only a pleasant memory – primarily for investors financing residential and industrial construction projects.

Today, the slight increases in prices of building materials noted until the last quarter of 2006 are now only a pleasant memory – primarily for investors financing residential and industrial construction projects.

In our opinion, the prices of building materials have risen because of the following factors:

• higher demand for building materials caused by a more newly-issued
  building permits (between January and May 2007 approx. 80% more
  construction permits were issued than in the analogous period of the
  previous year);


• less ceramic brick producers (more than 70% of small and mid-sized
  brickyards were liquidated by the end of 2006);


• Poland’s lower CO2 emission limit, downsized by the European Union,
  which necessitates a reduction in the output of building materials,
  especially those whose production is connected with the emission of
  significant amounts of CO2 during combustion; this primarily concerns
  cement – a basic material in residential construction and road works;


• in the opinion of some market analysts, producers and intermediaries
  took advantage of the shortages evident in some assortments to raise
  prices.

According to GUS data, the climate in the construction industry in May 2007
was better than in April 2007; the industry performed better in both those
months than in the analogous months of the past six years. Between January
and April 2007, construction and assembly output was 50.4% higher than in
the comparable period of 2006.