SINGAPORE (EDGEPROP) - According to data compiled by global construction consultancy firm Linesight, a number of key commodities pertinent to the construction industry have seen prices ease in 3Q2022, prompting construction material costs in Singapore to moderate.

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In its 3Q2022 Singapore Commodity Report, the firm highlights that prices of key construction materials in Singapore have tapered down from the spikes recorded in the first half of the year following the outbreak of the Russia-Ukraine war. “It is encouraging for construction players to see material prices stabilising, with some materials heading towards a relative downward trend,” observes Michael Murphy, director at Linesight Singapore.

Among the commodities tracked in Linesight’s report, copper prices saw the largest decline during the quarter, falling 16% q-o-q. The firm attributes this to a slowing Chinese economy amid Covid-19 lockdowns, along with a general decline in investor confidence.

Steel prices also eased in 3Q2022, with steel rebar registering a decline of 8.5% q-o-q. Other commodities that registered q-o-q price declines included asphalt (–3.7%), welded mesh (–2.6%), bricks (–6.7%) and diesel (–3.7%). In contrast, commodities that registered q-o-q price increases included lumber (+5.4%), cement (+3.7%) and concrete (+0.8%).

Looking ahead, Linesight anticipates prices of certain commodities to further stabilise, amid a gloomy outlook for global economic activity and rising interest rates. Steel prices, in particular, are expected to register a decline on the back of falling iron ore prices across Asia, coupled with weaker steel production in China. The firm is projecting steel rebar and flat steel prices to decrease 4.5% and 3% q-o-q, respectively, in 4Q2022. Welded mesh prices are also anticipated to fall 3.8% q-o-q in 4Q2022, while asphalt and limestone prices are both expected to dip 1% q-o-q.

Nonetheless, Linesight cautions that prices of several commodities will remain elevated due to factors such as strong demand, supply-chain delays and transportation costs. These include limestone, bricks and plasterboard, which Linesight is projecting to grow 0.5%, 0.8% and 0.5% q-o-q respectively in 4Q2022. To that end, the firm is retaining a “conservative outlook” for the Singapore construction sector.

This comes amid a damper overall economic outlook for Singapore and the wider Asia Pacific region. In October, the International Monetary Fund (IMF) cut its growth forecast for Asia Pacific to 4% for 2022, down by 0.9 percentage points compared to its April forecast. For Singapore, the IMF trimmed its growth forecast to 3% for the year, down from the roughly 4% projected previously.

Linesight also shares that construction output in Singapore has “expanded considerably” throughout the year, in tandem with the ongoing recovery in the sector post-pandemic, though overall output remains below pre-Covid-19 levels.

In addition, it highlights that long-lead equipment — which refers to equipment or machinery that takes a lengthier time to procure — has seen lead-times drastically extended since the start of the year due to material shortages, delays and supply-chain price hikes. This has in turn led to reduced commitment from suppliers for new projects, which may have an impact on future construction output.

In terms of Singapore’s construction output in 2022, Linesight is forecasting residential output to grow by 4.3% y-o-y to $5.65 billion, while infrastructure output is projected to grow 2.3% to $4.24 billion. Institutional output — which includes education facilities, hospitals, community centres and other institutional buildings — is expected to rise 3.9% to $3.48 billion. Meanwhile, construction of power and utility-related projects is expected to grow 2% to $2.01 billion, while commercial output such as hotels, offices and shopping malls is expected to rise 6% to $1.33 billion.