Building Materials
69. The apparent higher rate of increase in property prices towards the end of 1972 and in the early part of 1973 could have been influenced by the rapid increase in the money supply at that time. But it is also possible that property prices increased at a faster rate than in earlier periods, partly as a result of more rapid increases in the prices of building materials. The prices and supplies of two of the more important build- ing materials are discussed below.
(a) Cement
70. Quite a large proportion (about 30%) of Hong Kong's cement requirements is manu- factured domestically; in the twelve months to September 1973, domestic output of cement amounted to 437 thousand tons compared with 432 thousand tons in the preceding twelve month period and almost all of this was for domestic consumption. But, whilst domestic output did not change significantly between the years ended September 1972 and September 1973, there was quite a substantial increase, of 22%, in cement imports (from 933 thousand tons to 1,136 thousand tons) and, again, almost all of this was for local consumption.
71. China, South Korea and Taiwan are the principal external suppliers of cement (providing 51%, 22% and 21% of total imports, in quantity terms, in the twelve months to September 1973). Import prices from all countries were fairly steady during the twelve months to September 1972 but they declined towards the end of the period. Import prices decreased further in the following six months, but in the second and third quarters of 1973 there were sharp increases, amounting to 30% in all.
72. The market price of cement was relatively stable in the twelve months to September 1972 and during the following six months, but it increased rapidly (by 35%) in the second and third quarters of 1973, no doubt as a result of the increase in import prices at that time.
(b) Steel Bars
73. Currently, about a half of Hong Kong's total requirement of steel bars of all sizes is imported. In the twelve months to September 1972, Japan, China and Taiwan were Hong Kong's largest suppliers of bars and rods, pro- viding, in quantity terms, 45%, 37% and 14% respectively of total imports (amounting to 174 thousand tons). In the twelve months to Sep- tember 1973, imports from Japan declined, in quantity terms, by 24% whilst those from Taiwan declined by 75%. On the other hand, those
from China increased by 19%. Overall, imports declined by 20 thousand tons, or by 12%. Of the 153 thousand tons imported in the year to September 1973, China provided 50%, Japan, 38% and Taiwan, 4%.
74. Import prices of bars and rods from all countries were fairly stable in the twelve months to September 1972, but they increased in the following twelve month period, and at a par- ticularly rapid rate in the second and third quarters of 1973. During the first quarter of 1973, import prices increased by 3% but, in the six months to September 1973, they increased by 33%, whilst those from China and Japan increased, respectively, by 46% and 27%.
75. Market prices, which were also fairly stable in the year to September 1972, were already increasing very rapidly, by 28%, in the first quarter of 1973; and in the next six months they increased by a further 54%. Market prices were lower than import prices until the first quarter of 1973 and this presumably indicates that ex-rolling mill prices of domestically pro- duced bars were lower than import prices over at least this period of time. The fact that market prices increased so very much more rapidly than import prices in the first nine months of 1973 probably largely reflects a shortage of supplies, but it is conceivable that it also indicates a significant increase in demand and, to some extent, this could have been associated with the rapid increase in the money supply already mentioned.
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