KUALA LUMPUR: MIDF Research says it is not overly concerned about the building materials price headwinds being a huge risk to the construction sector.
While prices still remain elevated, MIDF Research is comforted by the declining trend that has been observed over the past few months.
"We expect margins to continue improving in the fourth quarter (Q4) 2022 onwards though a dampener may be due to higher labour costs due to a shortage of foreign workers as contractors are paying more for critical projects.
"However, we expect this situation to improve moving forward as construction is among the sectors that are allowed to hire from all 15 permitted source countries," it said in a note today.
MIDF Research said the average steel bar prices in Malaysia had declined 1.6 per cent month-on-month (MoM) to RM3,663.54 per tonne in October (September: -2.1 per cent MoM to RM3,721.80), marking its fourth consecutive month of downtrend, in line with the easing steel prices globally that is being affected by demand concerns.
On a year-on-year basis, it was still an increase of 12.3 per cent year-on-year (YoY), but at its slowest pace since May 2021.
Cement prices also recorded a decline, by 0.5 per cent MoM (August: -0.53 per cent MoM) to RM20.81 per 50kg bag.
Meanwhile, the prices of five types of mild steel bars and four types of high tensile deformed bars it tracked were generally lower across the board.
The average steel bar prices in the peninsular retreated -3.3 per cent MoM to RM3,212.14 per tonne.
The central region saw the highest decline of 4.0 per cent MoM to RM3,487.69 per tonne.
In Sabah and Sarawak, average prices were 0.82 per cent MoM lower to RM3,899.24 per tonne, with the highest decline recorded in Miri at 1.8 per cent MoM to RM3,793.97 per tonne.
MIDF Research reiterated its "Positive" recommendation on the construction sector in view of the manageable cost headwinds and the potential rollout of infrastructure projects in Malaysia, with positive developments being driven by the upcoming Mass Rapid Transit 3 tender awards by the end of 2022.