On its own, the global steel price rally in recent months may not have much impact on the profit margins of those in the built environment sector. But it is another significant headwind that they face in their operations, industry observers said. Demand for steel is rising as activity picks up across the construction and manufacturing industries. A Jan 2021 construction price update from BCA showed preliminary figures for the price of high tensile steel bars of 16-32mm dimensions was S$809 per tonne in Dec – a 13.3 per cent y-o-y increase. Supply, too, has been constrained in some parts. The increase does not have Or Toh Wat too worried. The group MD of civil engg company OKP Holdings said many of its contracts would contain escalation clauses to protect them in the case of price increases.CGS-CIMB equity research analyst Ong Khang Chuen however, expect to see a margin compression for projects that contractors have secured pre-Covid-19. This would be due to multiple factors including not only higher raw material prices but also higher labour costs and lower productivity from social distancing measures.... Continue Reading