Chinese National Association of General Contractors (CNAGC, 營造公會全國聯合會) said the recent commodity price declines have been steep enough and will likely stabilize in the first quarter after China Steel Corp (中鋼) on Wednesday announced a record price cut on steel prices for the first quarter.
China Steel, the nation’s largest and only integrated steelmaker, lowered its domestic steel prices by 22.56 percent, or NT$7,058 (US$211.91) per tonne, the largest single price cut since the company was established in December 1971.
CNAGC chairman Chen Hwang-ming (陳煌銘) said prices of steel bars and ready mixed concrete, which account for a major portion of total construction costs, have declined by 50 percent and 30 percent respectively since the first half of this year.
Chen said the cut in steel bar prices was undoubtedly good news to the construction industry, however, since countries worldwide have been pushing public works projects in the face of global economic downturn, he did not think construction material prices would continue falling in the long run.
The drop in steel prices will be a relief to the construction industry, which saw public project contractors demand an increase in government subsidies earlier this year. But Chen said contractors are still facing financial difficulties because their payments were cut by property owners over construction disputes.
When construction disputes arise on public projects, time-consuming litigation ensues, Chen said as he urged the government needs to follow international standards by settling disputes through mediation or arbitration, such as a dispute resolution board, to help enhance the execution efficiency of public projects.
In related news, the Public Construction Commission said on Wednesday that the sharp fall in steel prices had helped to ease the high rejection rate of bidding for the procurement of public works projects in the first half due of the year caused by soaring costs, and the procurement process was returning to normal in the second half.
As of Nov. 21, a total of 151,265 cases of public projects procurement had been completed, with the total amount reaching NT$980 billion, a significant improvement from the same period in 2006 and last year, the PCC said.
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