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Construction industry’s cost pressure is alleviating

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PTALING JAYA Cost pressure is allegedly lessening for Malaysia’s construction industry as a result of lower steel bar costs and a slower rise in cement prices.
The nation’s expanding job flows are also expected to benefit the construction sector, which continues to obtain “positive” evaluations from MIDF Research.
“We maintain our ‘positive’ view on the construction sector as the current cost headwinds remain manageable with the softening steel bar prices and the slower increase in cement prices,” the company said.
“We anticipate that the industry would benefit from increased job flows brought about by Budget 2023 as well as Sarawak development plans to enhance connectivity in the state, which is essential to act as a gateway to Nusantara when Indonesia moves its capital.

The larger companies and those with excellent bank balances and order books, namely Gamuda Bhd, IJM Corp Bhd, and Sunway Construction Group Bhd, were MIDF Research’s top recommendations for the sector this year.

It suggested Malayan Cement Bhd since cement is a direct benefactor of the expanding construction industry.

In its report from yesterday, MIDF Research noted that Malaysia’s average steel bar prices had decreased for the second consecutive month, in line with a decline in the price of steel and iron ore globally, as was anticipated after Chinese authorities intervened in March 2023 to quell the rise in iron ore prices.

Based on the prices of five different kinds of mild steel bars and four different kinds of high tensile deformed bars that the Statistics Department has been keeping track of, the average price fell by 0.53% month-over-month (m-o-m) to RM3,706.95 per tonne in June 2023.
The rate of the monthly increase had moderated even though cement prices had continued to rise.
The building material’s average price increased for the ninth consecutive month in June by 0.22% m-o-m, the slowest rate of monthly increase since December 2022, to RM22.87 per 50kg bag, according to MIDF Research.
According to the statement, “this was as a result of higher selling prices and lower rebates offered due to higher raw material costs.”

The central and eastern regions of the Peninsula saw increases of 0.1% m-o-m and 0.4% m-o-m, respectively, to RM22.03 and RM22.49, while the northern portion of the Peninsula saw the biggest increase of 1.4% m-o-m to RM22.57 for every 50kg bag.

Sabah and Sarawak continue to charge RM23.12 for a 50kg bag of cement.

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