What lies ahead for Singapore’s building industry and commodities pricing

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The GDP of Singapore is expected to increase by 1.5% in 2023, less than 3.6% in 2022. The slower growth is mostly caused by a contraction in manufacturing due to an economic slowdown across the globe. In Singapore, the Monetary Authority of Singapore (MAS) has ceased tightening its monetary policy and has maintained its policy rate band for exchange rates. This Consumer Price Index (CPI-All) is expected to remain at a record high by 2023, the MAS expecting inflation to be within the range of 5.5% to 6.5%.

The construction industry in Singapore saw a real-time growth in the range of 6.6%, which can be explained by the increase in investor and consumer confidence and the relaxation of Covid-19-related travel restrictions and business restrictions.

The sector is also predicted to expand at an average of 5.4% annual rate in 2023 as a result of the proposed public housing developments. The industry faces many issues like a shortage of workers and high costs. However, the situation is improving and the industry is expected to pick up speed in the near to medium time.

Prices for lumber have remained relatively stable but have been rising and are likely to remain within a band in the coming quarters. This is due to the consistent market demand driven by the incentives to sustainable construction using the utilization of engineered lumber, and the increase in residential construction that is beginning to recover from the slump.

Cement and aggregates
After a sharp rise in the first quarter of the year however, cement prices remain high, held by the high cost of production and a growing demand. Construction output is growing following the drastic decline in 2020, which has seen a significant growth in investments in residential and infrastructure, and this is likely to contribute to an upward pressure on cement and the prices of aggregate.

Bricks and concrete blocks
Prices for bricks have been fairly steady, however as construction demand is increasing the market will see increased pressure to increase prices over the next few quarters.

Steel (rebar and structural)
After dropping throughout the second quarter of the year, and even into the early 2023 period, prices for steel are likely to increase in the coming months, fueled by increasing demand and the start of construction on a range of big civil engineering constructions. Due to the growth in China’s demand, the demand in the region is also expected to pick up. Prices for raw materials are likely to fluctuate, but they are not expected to return to the peak in the first quarter of 2022.

Prices for copper rose dramatically in January 2023 when the demand for copper in the world grew due in part to China’s opening up following the expiration the zero-Covid rule. Prices did fall between January through March 2023. But, despite the decline in prices, they remained elevated on a monthly basis. Copper prices in the United States will increase over the long term due to public infrastructure projects that are part of the Green Plan 2030 of Singapore.