Dubai: After an extended period of relative stability, building material prices could be in for some wild swings.
“Continued dollar strength will exert pressure on prices, but the impact of increased demand from the local construction sector will only be felt gradually as activity ramps up in 2017-18,” said Sameer Lakhani, managing director at the consultancy Global Capital Partners. “The macro focus remains on the dollar’s moves, in turn linked to interest rate changes.
“But any reversal in this strength will have a ripple impact on prices.”
For steel, in particular, the outlook on pricing and local demand is deemed as “mostly positive”. According to Bharat Bhatia, CEO of the steelmaker Conares, “The trend in 2017 is scaling upwards. In the international market, iron ore, coking coal and scrap are in the range of $300. As a prediction I would say steel would be Dh1,875-Dh1,900 a tonne — and that is at a minimum.”
From a demand perspective, the local market is hoping for a 12-15 demand uptick. This year, local consumption is estimated at 3-3.2 million tonnes. “If we were to look further at 2018 and 2019, it will grow much higher. The competition between local and international imports is fierce with the local producers matching up to the prices at most times.
“We have also appealed to the Ministry of Economy to introduce stricter inspection teams to control substandard imports of steel pipes, which can be the cause of some serious accidents.”
But for main-line contractors, building commodity prices could still do with some stability. “They are all over the place now ... copper can swing thousands of dirhams in a day,” said Colin Timmons, CEO at Al Naboodah Construction Group. “Last week, steel rebars shot up. Clients want a fixed price lump sum over a period of time. Otherwise, it’s difficult for us.”
