http://www.businesstimes.com.sg/arch...rices-may-rise
Published May 12, 2012
Granite shortage hits building sector; concrete prices may rise
Aggregate shipments from Karimun have been disrupted
By Felda Chay
THE local construction industry has been hit by a shortage of granite, a key raw material for making concrete, after shipments from Indonesia were disrupted.
BT understands that Indonesia's Karimun island has stopped supplying Singapore with granite - an aggregate which is used with cement and water to make concrete, a major building block. The disruption is said to have started last Sunday.
This follows a reported drop in the supply of aggregates - usually granite or manufactured sand - from Malaysia last month after some suppliers there expressed reluctance to transport the material to Singapore. It appears that a Johor lorry union was unhappy that Singapore was now coming down hard on overloaded lorries.
Already, some construction firms here have said that suppliers of ready-mixed concrete are planning to increase prices of the material as a result of the shortage.
Said one contractor, who declined to be named: "This week, suppliers asked to increase prices by between $4-$6, to $105-$107 per cubic metre for ready-mixed concrete. The higher prices will kick in next week."
Indonesia is one of the largest suppliers of aggregates to Singapore, accounting for 40 per cent of overall supply, with Karimun one of the key exporters. Malaysia and other countries account for the remaining 60 per cent.
Singapore Contractors Association Ltd (Scal) president Ho Nyok Yong confirmed that supply from Karimun had indeed been disrupted as of late last week. The reasons for the disruption are not clear, he said.
"We are now seeing a bit of shortage of aggregate but there is still supply. The shortage however has already affected some projects.
"Scal would like to meet with the Building & Construction Authority for a consultation as soon as possible to resolve this matter," he added.
"Otherwise, the industry will be badly affected if the problem drags on."
When contacted, a spokesperson from the Building & Construction Authority (BCA) said: "We are aware that there are some developments relating to the supply of aggregates from Indonesia since May 6.
"Currently, there is no significant impact on supply as there are alternative sources. Nevertheless, BCA is closely monitoring the situation and will work with industry stakeholders to ensure that construction activities in Singapore will not be affected."
A top executive from one of Singapore's larger construction firms, who declined to be named, said that the disruption stemmed from a reclassification of the raw material.
Aggregate, he said, was previously classified as a processed raw material. However, Karimun now wants to classify it as an unprocessed raw material, which falls under a completely different tax regime here.
He added that if the supply shortage drags on, building costs could rise, as some ready-mixed concrete suppliers have already indicated that they want to raise prices.
According to data from the BCA website, demand for ready-mixed concrete in Singapore in February 2012 alone was 1.1 million cubic metres.
In 2007, Indonesia imposed a blanket ban on the export of sand to Singapore which remains in place till today.
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