SINGAPORE – The lifting of Covid-19 border restrictions and safe management measures may have thrown a lifeline to the beleaguered construction sector, but it is still not out of the woods as cost pressures have continued to rise off the back of the war in Ukraine and lockdowns in China.
High energy prices have also pushed the price of raw materials such as steel rebars, aluminium and copper up by 20 per cent in recent months, Singapore Contractors Association Limited (SCAL) president Ng Yek Meng told The Straits Times on Monday (April 18) at a groundbreaking ceremony for SCAL’s new Construction Hub.
This was after materials costs had already risen sharply over the past two years.
Factories in China have experienced a lot of disruption, Mr Ng said, especially due to the recent Covid-19 lockdowns, which have led supply chain snarls and shipping containers piling up Chinese ports.
Speaking to ST on the sidelines of the ceremony, Minister for National Development Desmond Lee said the Government does not see any direct impact from the Ukraine war on the construction sector at this time, but the authorities remain vigilant.
Construction material costs have gone up, but Mr Lee noted that many government projects here have fluctuation clauses that allow contract prices to be adjusted.
“We continue to study what more needs to be done to better support our contractors,” he said.
Asked about the fresh delays to several Build-to-Order projects just months before they were due to be completed, Mr Lee sought the understanding of home buyers, adding that most projects, both private and public, have been affected by Covid-19.
“We know that the delays have significantly affected many people’s life plans and we are working very closely with our partners, contractors and consultants to ensure projects remain on track,” Mr Lee said.
To prevent more delays, help is being given to firms to cope with supply chain issues and financial challenges, while some adjustments can be made for certain projects, such as extending construction work beyond regular hours, he added.
“Of course, at the end of the day, we want to make sure that the safety and quality of the projects are not affected. I think that is critical and many home buyers would expect no less,” he added.
Mr Michael Murphy, a director at multinational consultancy Linesight, said the conflict in Ukraine has led to a resurgence in volatility for core construction commodities, such as steel, copper and diesel, and he expects prices to remain high for a large portion of 2022. Given oil’s role in steel production, the volatility in oil prices since the start of the conflict has also had a further impact on steel prices, he said.
“The ongoing lockdowns across China due to new waves of Covid-19 will also disrupt production and export in the coming months,” Mr Murphy added.
Straits Construction executive director Kenneth Loo said the price of steel bars in Singapore was about $700 per tonne at the end of the circuit breaker in June 2020, before it shot up to about $1,100 per tonne at that start of 2021.
After stabilising for a while, steel bar prices have spiked again to about $1,300 per tonne now.
