Construction material costs to fall further in Q2, but tariff policy may disrupt supply chains

Business Times

a day ago

[SINGAPORE] Prices for some construction commodities in Singapore are tipped to fall further in the second quarter, with steel rebar prices forecast to fall 13 per cent year on year driven by oversupply and competitive exports from China.
This could benefit developers, builders and other construction contractors, though new tariffs may disrupt global supply chains in the near term, a report by construction consultancy Linesight said.
Linesight predicted that prices for several key materials – such as copper, steel rebar, stainless steel, steel flat, cement and diesel – will dip in the second quarter of this year.
Lower prices of between 1 per cent and 13 per cent year on year follow corrections across most of the Asia-Pacific (Apac) in 2024.
Steel rebar prices in Singapore, for instance, have been on a decline since Q2 2023. It is forecast to fall another 20.6 per cent in Q2, extending an estimated 19.7 per cent decline in the first quarter. Year on year, steel rebar prices are expected to be 13 per cent lower.
The drop in steel rebar prices, in particular, is set to continue in most of Apac and Gulf Cooperation Council markets amid global trade tensions and uncertain local production, said Linesight.
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Oversupply and competitive export prices, especially from China, puts pressure on regional steel rebar prices, it added. 'The imposition of US tariffs has inadvertently increased domestic steel availability, further contributing to price declines in some regions.'
Prices of concrete, lumbar and plasterboard are estimated to hold steady in Q2, while that of bricks could inch up 1 per cent and aluminium up 6 per cent.
Aluminium prices had fallen in the previous year – bucking gains in most of Apac – due to already high base prices, Linesight noted. But tight supply conditions, rising production costs and geopolitical factors turned the tide in 2025 with prices up seen creeping back up, it said.
For the rest of this year, Linesight projects a -1 to +1 per cent price change for most of Singapore's construction commodities.
'Global geopolitical tensions continue to contribute to the overall inflationary risk premium in the construction industry,' said Linesight.
'Trade restrictions, tariff uncertainties, and raw material bottlenecks are creating unpredictable cost scenarios for developers and contractors. These factors, coupled with energy market volatility, are amplifying volatility in cost planning and procurement.'
Easing wages
The consultancy pointed out that labour inflation eased in Singapore as well, to 1.5 per cent in 2024, from 9 per cent in 2023.
Still, shortages in structural skilled labour persist, putting pressure on the cost of construction, it said.
Linesight added that mission-critical sectors are now facing inflationary pressures, with tight contractor availability and longer lead times for equipment. These include sectors such as data centres, renewable energy facilities and artificial intelligence-driven infrastructure projects.
Overall, construction output is likely to grow steadily across Apac, with strong activity in data centres, infrastructure, industrial and energy sectors, Linesight's report showed.
This is mainly driven by government spending, coupled with large scale projections and industrial expansion, it said. The region is poised to see the fastest growth of data centre colocation over the next five years, commanding a massive construction pipeline of US$56.4 billion.
Singapore's construction industry is forecast to see average annual growth of 4.1 per cent from 2025 to 2028, up from 3.3 per cent in 2024, fuelled by investments in oil and gas, transport, and renewable energy projects.
Construction contracts surged 34 per cent year-on-year in the first nine months of that year.
The industry's projected improvement is further boosted by the government's push to achieve 2 gigawatt-peak of solar power by 2030 and carbon neutrality by 2050, said the consultancy.
Billions of dollars have also been set aside for its Land Transport Master Plan 2040, which charts Singapore's land transport strategies, and the undersea energy cable project, it said.