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Tuesday, January 20, 2009

Building materials prices to remain stable

PETALING JAYA: Prices of most construction building materials are likely to remain stable this year amid slowing demand and lower production costs on falling commodity prices.

Master Builders Association Malaysia (MBAM) president Ng Kee Leen predicted prices of all construction materials would eventually drop closer to the levels before the fuel hike in June last year. He said the current prices should stay stable unless the Government made drastic changes to the base materials prices.

Ng Kee Leen

“Government policies have to be consistent and predictable, as investors dislike uncertainty,” he told StarBiz yesterday.

Ng also said MBAM’s ongoing discussion with cement manufacturers on price reduction was encouraging and the association was confident of a positive outcome.

Meanwhile, National Ready-Mixed Concrete Association of Malaysia on Sunday announced a 5% price reduction for ready-mixed concrete effective Feb 1. It said the new recommended selling prices would be applicable in Kuala Lumpur and Selangor.

Transportation charges and steel bar prices have been revised several times since last year.

Ng said prices of domestic steel bars had declined to about RM1,900 per tonne, which was about RM200 per tonne above the imported steel price. He estimated domestic steel demand at about 2 million tonnes in 2009.

However, since the conditional steel import liberalisation on May 12, the import of other steel products, for both the construction and non-construction industries, had faced new setbacks such as higher import fees, more frequent product testing and longer importation procedures, he said.

“It (import of steel products other than steel bars) has become less efficient and unproductive,” he said.

On the RM7bil stimulus package and the second scheme, Ng hoped the Government would implement them quickly.

“New contracts must start entering the market as many ongoing jobs were awarded in 2007 and will be completed soon.

If not, the construction industry will be affected in 2010,” he said.

He said the impact of the stimulus package would be felt only in the second half of 2009.

An analyst with Maybank Investment Bank Bhd who has an “underweight” on the construction industry this year projected that construction materials, whose prices had fallen since the fourth quarter of 2008, would not revert to an uptrend anytime soon.

She forecast the domestic construction industry would remain quiet this year, while local construction companies with overseas projects such as in the Middle East could risk jobs cancellation and potential delayed payments.

She added that construction material costs in India had not come off as quickly as in Malaysia. She also predicted international steel prices to average US$600 per tonne in 2009 from around US$400 per tonne currently.

By The Star (by K.C.Law)

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