Posted on 23 Apr 2016
The construction industry is entering an unprecedented crisis, as the price of steel bars has increased by more than 50% since January.
The hike will affect the business of contractors in the country and raise prices by over 5%, absorbed by the contractors.
Penang Master Builders & Building Materials Dealers Association president Datuk Lim Kai Seng told StarBizWeek that the price of steel bars have increased from about RM1,500 per tonne in January this year to about RM2,450 per tonne at present.
“Contractors who had secured construction jobs from either the Government or the private sector prior to the latest increase in steel pricing are in a jam now, as they have to adhere to the old pricing negotiated early this year.
“This could cause many of our members to go bust.
“Until about two weeks ago, the price per tonne was hovering at about RM1,950.
“The prices of other construction materials, however, are still stable,” he adds.
The current price of a 50-kg cement bag is hovering between RM12.50 and RM13.00, while the price of sand is over RM60 per cubic metre.
Real Estate & Housing Developers’ Association Malaysia (Penang) chairman Datuk Jerry Chan (pic) says that the entire situation is topsy-turvy at the moment, as there is a shortage or zero supply of a variety of essential steel bar products.
The shortage has spilled over to steel mesh and pre-cast reinforced concrete products, increasing prices and causing delayed deliveries.
“The price per tonne was hovering at RM1,500 in January and then went up gradually.
“The last two weeks saw the price jumping drastically, causing the price per tonne to be about 50% higher than it was in January,” he says.
Chan explains that when the price of steel bars is down, it helps to cushion the impact of the price hike in labour and other raw materials.
“Now this cushion has been removed.
“If not addressed immediately by the authorities, projects would be delayed and contractors might go out of business.
“The selling price of houses may be increased by 1% to 2% or more if the situation persists,” he reckons.
Ideal Property Group executive chairman Datuk Alex Ooi says there are local steel manufacturing companies that have shut down temporarily recently to do maintenance work.
“This has exacerbated the supply situation of steel bars in the local market.
“Projects may get delayed as a result of the shortage and high pricing.
“Steel bars make up about 45% of the raw materials used in the structure of high-rise projects,” he says. Eco World (North) general manager Khoo Teck Chong says the group has locked in the prices for the essential construction raw materials early this year for most of its launched projects.
“We don’t foresee any delays in the implementation of the projects,” he adds.
