A sharp global rise in the price of steel caused by a construction boom in China is hurting local construction companies, businesses said Monday.
“It is a huge rise that I’ve never seen through many years’ experience in the construction business,” said Chea Sitha, director general for Villa Parc Engineering Company.
Steel prices have more than doubled over the past three months, importers said Monday. In December, steel sold for about $290 per ton. Now it sells for about $600 per ton.
“This situation is seriously affecting construction companies that have signed contracts to build apartments or hotels,” Chea Sitha said, adding that he doesn’t think the price will drop any time soon, since the demand for steel on the global market is high.
China is sucking up half of the world’s supplies of cement, a third of its coal and more than a third of its steel, according to areport Sunday from Bloomberg news. Demand from China has reportedly lifted global copper prices to an eight-year high and nickel, which is used in making stainless steel, to a 14-year high.
As an import country, Cambodia will be directly affected by the high steel prices, Finance Minister Keat Chhon said last week.
“There is a huge demand in the Chinese market for construction materials,” the minister said.
Concerning China’s construction boom, he said, “If you don’t come home for one day, you will miss the road, if you don’t come home for a week, you will confuse your district…if you don’t come home for a year, everything will be changed.”
Cambodia imports about 80 percent of its steel from China and the rest from Vietnam, Thailand and Indonesia, said Mong Reththy, president of the Mong Reththy Group, a local company that imports steel and construction material to build schools, roads and bridges for the government.
“It’s a big problem,” he said Monday. “We are the import country. We have no state-owned steel or metal factory. Even if the price of steel increases to $1,000 per ton, the government will not be able to help.”
From his conversations with Chinese business representatives, Mong Reththy said the price of steel may remain at about $600 for years.
“No small market around the world can keep their steel price stable in this kind of situation,” he said.
But he did not think the large steel price increase would effect the economy too much.
“People are still doing construction everywhere,” Mong Reththy said.
Kong Triv, chairman for the Eastern Steel Corporation Industry, which runs the only steel factory in Cambodia, said Monday that nobody can stop the price movement created by China’s increasing appetite for steel.
“We are selling our steel at the international market price,” Kong Triv said by phone from Thailand. “I have never seen the price of steel rise like this before.”