“The increase in the cost of materials is seriously affecting housing prices and the purchasing power of buyers. This, coupled with rising labor costs and interest rates, poses a serious threat to the country's economic growth,” said Fermin Acosta of Constructora Crisfer.
SANTO DOMINGO.- The price of steel is rising again, adding concern and uncertainty to the construction industry, which has been hit hard by rising construction material prices since the pandemic.
The price of a bundle of rebar rose from 81,000 to 84,500, a new increase that adds to the unstoppable increases that, like the price of cement bags and other supplies, threaten to halt the growth of the sector and, therefore, the country's economy.
“The increase in the cost of materials is seriously affecting housing prices and the purchasing power of buyers. This, coupled with rising labor costs and interest rates, poses a serious threat to the country's economic growth,” said Fermin Acosta of Constructora Crisfer.
Engineer Arturo Espinal, president of the Dominican Association of Hardware Stores (ASODEFE), attributes the price increase to the war between Russia and Ukraine, countries which he says represent the largest importers of the material.
“We are experiencing a difficult situation with the war in Ukraine, because being out of the market, both countries increase demand and supply is not met, causing prices to skyrocket. This is one of the biggest factors, in addition to the costs of fuel and energy, which also have an impact,” the union leader stated.
He said that since steel has such an important component in the construction of a building, because there is no construction without a structure, the increase will be reflected in the cost of the buildings.
He referred to the price of cement, which he says is currently selling for between 490 and 500 pesos per bag. However, Espinal notes a positive aspect: “The sector has remained dynamic, as Dominicans continue to invest in their country through remittances, and small and medium-sized construction projects have kept the sector thriving.”.
“The issue of rising prices is truly a global one. The truth is, we hope it reaches its peak soon,” says engineer Joan González of the Paceo Group. He cites the significant losses incurred on completed contracts and the substantial price increases in projects that have not yet begun as consequences of these price hikes.
Steel and war in Ukraine
It is a basic product used in almost every facet of construction. Russia and Ukraine combined are the world's second-largest steel exporters after China, with more than 40 million metric tons exported annually: the war between the two countries, which shows no signs of abating, is shaking the steel market and causing prices to rise.
In addition to sanctions, prices are affected by supply chain disruptions and other complications of the war. “It certainly looks like prices will continue to rise in the short term. We forecast they will rise again at the end of this month and into April,” said analyst Kaye Ayub of the consultancy MEPS International last March. “The supply side has been massively disrupted in Europe, and that will take quite some time to resolve,” he told the Report Acero website.
Around 40% of the steel produced in Europe comes from so-called electric arc furnaces, which use large amounts of electricity to melt scrap iron into steel, according to the Washington Post. Some electric arc furnaces across Europe have had to close or reduce their operations due to higher energy costs, further restricting supply.
