A Price Drop on the Horizon!

Singapore's construction industry is bracing for a substantial drop in material prices as we head into the second quarter of the year. Reports indicate that steel rebar prices alone could plummet by 13% year-on-year, thanks largely to a significant oversupply and fierce competition from Chinese exports.

Who Stands to Benefit?

This decline is a silver lining for developers, builders, and contractors who can expect to see some relief in their costs. However, the construction landscape is not without challenges, as new tariffs could pose disruptions to global supply chains in the near future, according to Linesight, a leading construction consultancy.

Material Prices Expected to Fall

Linesight predicts that several key commodities—including copper, steel rebar, stainless steel, cement, and diesel—will see price drops ranging from 1% to 13% in Q2 2024. Since Q2 2023, steel rebar prices in Singapore have been on a downward spiral, projected to plunge an astounding 20.6% in the upcoming quarter, following an estimated 19.7% dip in the first quarter.

Pressure from Oversupply and Trade Tensions

The report emphasizes that ongoing global trade tensions and uncertain local production can further exacerbate the drop in steel rebar prices across Asia-Pacific and Gulf Cooperation Council markets. Oversupply, particularly stemming from China’s aggressive export strategy, is inflating competitive pressures on regional prices.

What About Other Materials?

While prices for concrete, lumber, and plasterboard are expected to remain stable, it's anticipated that brick prices might inch up by 1% and aluminum by a notable 6%. After experiencing a decline last year, aluminum prices are set to rebound, influenced by tightening supply conditions and increasing production costs.

Navigating Uncertain Terrain

Linesight also hints at the broader economic landscape, stating that global geopolitical tensions continue to fuel inflation risks within the construction sector. Trade restrictions and raw material bottlenecks are creating unpredictable expenses for developers and contractors, exacerbated by energy market volatility.

Labor Market Insights

On the labor front, Singapore has seen a decrease in labor inflation, dropping to 1.5% in 2024 from a staggering 9% in 2023. However, a persistent shortage of skilled labor remains a challenge, keeping construction costs under pressure.

Promising Growth Ahead

Despite these challenges, Linesight's report is optimistic about overall construction output in the Asia-Pacific region, with strong activity anticipated in data centers, infrastructure, and energy sectors, primarily driven by government investments. The region is projected to experience unprecedented growth in the data center market over the next five years, supported by a construction pipeline valued at a staggering US$56.4 billion.

Looking to the Future

As Singapore's construction industry gears up for an average annual growth of 4.1% from 2025 to 2028, up from 3.3% in 2024, significant investments in oil and gas, transportation, and renewable energy projects will propel this expansion. The government’s commitment to achieving 2 gigawatt-peak of solar power by 2030 and carbon neutrality by 2050 underscores the ambitious roadmap ahead, supported by substantial funding for comprehensive land transport and undersea energy initiatives.