The Business Times

Cost of construction materials to moderate in Q4: Linesight

Yong Hui Ting
Published Wed, Nov 2, 2022 · 03:34 PM

CONSTRUCTION prices appear to be tapering off from its earlier volatility in the first half of the year, given a conservative outlook on the sector in the coming months.

Prices of steel rebar and flat steel are projected to decrease by 4.5 per cent and 3 per cent respectively from Q3 to Q4 2022. This trend is expected to continue as iron ore prices drop across Asia, according to a report by Linesight on Wednesday (Nov 2).

Meanwhile, concrete prices are expected to remain high and increase by 0.7 per cent, as the outlook for raw materials and elevated transportation costs persist.  

“Although prices remain elevated as inflation proves to be one of the key challenges alongside supply chain delays and labour constraints, prices that are stable are expected to remain so for the coming months and into 2023, with some even trending downwards,” wrote researchers in the report.

While there is a gloomy outlook for global economic activity, coupled with the slowing down of China’s economy, demand stemming from investments in renewable energy is expected to contribute to copper prices staying relatively high. Linesight predicted copper prices will increase by 1 per cent from Q3 to Q4, although they have dropped from the mid-2022 highs. 

Even as prices stabilise, the lead times of long-lead equipment extended drastically since the start of 2022 as a result of material shortages, delays and price hikes throughout the supply chain. This has led to reduced commitment from suppliers for new projects.

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Singapore recorded a 4.3 per cent and 3.9 per cent expansion in its retail and institutional construction sector from 2021 to 2022.

While Global Data recently revised its forecasts for the city-state’s construction sector down to 3.5 per cent, Michael Murphy, director at Linesight Singapore, said growth will still be buoyed by a few ongoing infrastructure and energy-related projects that faced disruption at the onset of the pandemic, but which have resumed as of last year.

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