Insufficient supply of iron ore around the world is one of the reasons for the rise in prices for rolled metal and steel rods in the construction sector, according to the Construction Industry Development Board (CIDB).
Its chief executive said that most of the iron ore mines cannot operate at full capacity due to natural disasters and the pandemic.
“This pandemic has truly challenged all parties, especially those in the construction industry. CIDB will explore measures to address this issue to ensure the continuity and resilience of the sector in the short and long term, ”he said in a statement today.
According to him, based on CIDB reports, prices for building materials remained stable throughout 2020, with the exception of steel rods and iron-based materials.
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Another reason for the price increase was difficulties in obtaining raw materials such as imported iron ore and scrap metal.
Supply was hindered by a Movement Control Order introduced during the pandemic, and renewed demand for a while led to higher prices for existing stocks.
As the pandemic raged, demand declined, forcing factories to cut production and stop operating at full capacity.
The rise in steel prices is also influenced by an unstable industrial cash flow network; Payment terms between contractors and suppliers additionally affect the price of materials for each transaction.
Suppliers tend to raise prices because they take into account the risk of late payment from the contractor, who in turn risks receiving late payment from the client.