KUALA LUMPUR, Jan 25 — Inadequate supply of iron ore worldwide is among the reasons why the price of steel bars in the country’s construction sector has increased, said Construction Industry Development Board (CIDB).

Its chief executive Datuk Ir Ahmad ‘Asri Abdul Hamid said most of the iron ore mines could not operate at full capacity due to natural disasters and the pandemic.

"This pandemic has indeed brought great challenges to all parties, particularly construction industry players. CIDB will study measures to address this problem to ensure continuity and sustainability of the sector for the short and long term,” he said in a statement today.

He said based on CIDB records, building material prices in the country had been stable throughout 2020 except for steel bars and iron-based materials.

According to CIDB’s records, the price of steel bars reached RM2,890.00/MT in January 2021.

Comparably, its price in January to April 2020 was RM2,435.00/MT and fell by -6.4 per cent to RM2,278.00/MT in May, remaining so until July 2020.

In August 2020, the price rose by 2.2 per cent (an increase of RM50 - RM80/MT) to around RM2,300.00/MT, while the price of iron in Peninsular Malaysia in December 2020, rose significantly by 22 per cent to RM2,800.00/MT.

Another reason for the price escalation was difficulty in obtaining raw material such as imported iron ore and scrap metal.

Delivery was hindered by the Movement Control Order imposed during the pandemic and renewed demand for a time caused the price of existing stocks to rise.

As the pandemic raged, demand declined, forcing factories to slash production and cease operating at full capacity.

"The increase in steel price is also influenced by an unstable industrial cash flow network; payment terms between contractors and suppliers further affect the price of building materials for every transaction.

"Suppliers tend to raise prices because they take into account the risk of late payment by the contractor who in turn risks being paid late by the client,” Ahmad Asri added. — Bernama