BY NEVILLE SPYKERMAN
PETALING JAYA: Developers are questioning the local shortage of steel – which has seen prices go up by between 30% and 40% – where there is none in the global market.
Real Estate and Housing Developers’ Association of Malaysia (Rehda) patron Tan Sri Eddy Chen Lok Loi warned that if the prices of steel continued to rise, buyers of new property, including affordable housing, would have to pay more.
He said shortages, late deliveries, along with the increase in price, were driving up construction cost.
“The Government needs to intervene fast,” he said.
He said an ordinary house needed between six and seven tonnes of steel bars which had increased from RM1,900 per tonne to RM2,300 per tonne in just a few months.
Chen said developers were worried because there was speculation that price of steel bars are set to rise again to RM2,500 per tonne next week.
For existing projects, contractors who have locked-in construction cost with developers would be the hardest hit.
“This 3% and 5% increase in cost is quite severe for contractors who have to absorb it,” he said.
But Chen said the increase would be factored in for new projects. This means buyers will ultimately have to pay more.
As for affordable housing, Chen said all parties should be contributing to reduce, and not increase, cost.
Last year, Malaysian steel millers were badly hit due to the aggressive dumping of China steel products at below-cost price in the global market.
But the oversupply of steel a few months ago had reversed following the increasing demand for steel in China.
Master Builders Association Malaysia (MBAM) president Matthew Tee said the sudden rise in steel price over such a short period was not justified even with the greater demand in China.
He said steel in Singapore was selling at around RM1,700 per tonne and the island did not have any steel manufacturers.
Tee said MBAM was made to understand that steel millers are out to make money as the prices before of rebar was relatively too low for them to be profitable.
“We are not against people making money but we hope this is not a case of excessive profiting,” he said.
He added that the increase in cost for steel could not have come at a worse time.
He said MBAM members were also complaining about the increase in cost for manpower after levies for foreign workers increased by 48%.
Tee claimed that the Government could have contributed to steel shortages after industry-wide raids on steel product importers in February.
It was reported that four public listed companies were among 10 raided by the authorities looking to curb the illegal imports of steel products.
The Malaysia Steel Association (MSA) had in a statement said authorities, checking on import irregularity, employed “heavy-handed tactic”.
MSA had expressed concern over the “heavily armed” authorities and that some of these companies have had their bank accounts frozen and their staff had their mobile phones confiscated.
