Commodity prices in Singapore remain elevated as construction sector’s recovery gathers momentum
Global construction consultancy, Linesight, has released new data revealing commodity prices for the final quarter of 2022 remained elevated with upward pressure expected through 2023 on some key commodities. Despite ongoing inflationary challenges amid a slowing global economy, construction activity in Singapore is resuming and progressing at a steady pace. While some commodities such as lumber and steel will trend downwards in the short-term, there will be upward pressures in later quarters as recovery builds momentum and prices react to strengthening demand. The findings are part of Linesight’s Q4 2022 Singapore Commodity Report.
Following a substantial decline in Q3 2022, copper prices were volatile in Q4 2022 and increased by 13.8%. Global copper demand is expected to strengthen in 2023 as it begins to experience the full effects of China’s reopening and the country’s significant investments in construction in late 2022. Domestic copper prices are expected to rise considerably in the longer term driven by the financing of green public infrastructure projects.
Weak residential construction and soft infrastructure output have influenced a marginal fall in steel and lumber prices in Q4 2022 and this trend is projected to continue into Q1 2023, decreasing by a further 1%. As we look ahead into 2023, works on several large civil engineering projects and the resumption of public residential construction will pose a considerable upside risk to the price outlook.
At a sectoral level, data center activity in Singapore has been impacted by the recent moratorium, with a rising number of developers and owners assessing the market position and starting to look at other Southeast Asia locations in more detail. It is expected the construction output of semiconductor facilities will also be affected as a result of recent movements within the US market to boost domestic semiconductor manufacturing. While many sectors continue to face uncertainty, the life sciences industry has continued a growth trajectory since the pandemic threw its importance into sharp focus. Manufacturers are increasingly basing headquarters in Singapore as the country develops into a hub for this flourishing industry.
Michael Murphy, Director at Linesight Singapore, said: “Despite a challenging environment, the Singapore construction sector is showing resilience and there is optimism for increased output driven by the recommencement of halted infrastructure projects and the government’s commitment to complete all delayed housing projects by H1 2025. Adopting a more strategic approach to supply chain management and exploring opportunities for modern methods of construction are key strategies for clients to adopt to help mitigate risks.”
You may access the full report here.
