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Govt to release sand stockpile from today

Uma Shankari
626 words
1 February 2007
Business Times Singapore
(c) 2007 Singapore Press Holdings Limited

Price set to drop to $20-$30 per tonne soon from current $40 high

(SINGAPORE) The government will release sand from its stockpile from today to make up for any immediate shortfall in the supply of building sand, it said yesterday.

The price of sand, which has climbed from about $20 a tonne last year to more than $40 a tonne yesterday, will be fixed by the government for the next few months, the Singapore Contractors Association Ltd (SCAL) said.

With the price fixing, the cost of sand is expected to drop to $20-$30 a tonne soon, before inching up gradually after a few weeks.

The announcements follow reports of work disruptions at construction sites here as the price of ready-mixed concrete climbs and supply continues to tighten after Indonesia said last week it was banning the export of land sand.

Singapore used to get almost all of its land sand, which is used to make concrete, from Indonesia. Since the ban, the price of ready-mixed concrete has jumped by about 50 per cent to about $120 per cubic metre, from about $80 per cubic metre before.

The government's stockpile is set to give the industry price and supply stability for the next few months while allowing it to make adjustments, the Building and Construction Authority (BCA) said yesterday.

For the longer term, the industry regulator is looking for new sources of sand. In the meantime, industry players are working together to come up with a cost sharing formula to help contractors and concrete suppliers hit by increased sand prices.

Both BCA and SCAL urged developers to bear a significant part of the increased construction cost since the price rise is caused by factors beyond the control of contractors. Typically, developers lock in construction costs in the contract, which means that the burden of increased raw material costs falls almost fully on contractors.

The BCA said: 'As contractors and concrete suppliers with ongoing projects may not be contractually protected against this sudden increase in price, developers are urged to work out a cost-sharing arrangement with the contractors and concrete suppliers. Government agencies will take the lead to bear part of the increase in the cost of sand for its existing projects.'

SCAL is in favour of employers and developers bearing the greater part of the construction cost increase as construction companies are less equipped to handle price increases than developers, who are able to pass on rising costs to home-buyers.

Construction companies welcomed the release of the government's sand stock, hoping that it will bring down the price of ready-mixed concrete quickly. 'If they (the government) release the stockpile, then it will definitely help with the shortage,' said chief executive officer of construction company KSH Holdings, Choo Chee Onn,

Even with the release of the government's stock and new sand sources, sand prices will not fall to pre-ban levels. The BCA said the price of sand is expected to rise due to higher costs involved in shipping sand from distant sources. Industry players also said that the sand price fixed by the government could climb after a few weeks.

Contractors have said that sand suppliers from new sources such as the Philippines have contacted them and offered sand, but at higher prices. BT understands that industry body SCAL has asked companies to alert the organisation about any profiteering.

Construction stocks continued to take a beating yesterday, with the Singapore Exchange's Construction Equities Index shedding 16.9 points, or 3.1 per cent, to close at 531.3 points. The index has dropped some 7.6 per cent since news of the sand ban on Jan 24.