Tuesday, June 25, 2024

Construction sector faces some steep price increases

Recent increases in the cost of building materials have caused problems for construction project budgets and affected the recovery of the sector in at least one state.

According to the vice president of the Mexican Chamber of the Construction Industry (CMIC), the cost of building materials such as cement, rebar and steel has increased by 15% to 25% since December.

Quel Galván Pelayo said that budgets formulated last year will be too low in many cases given the increases. That could leave some public and private sector projects short of the resources they need for completion, he said.

“If you drew up a plan without taking the increase into account, you’re going to take a hit this year,” Galván said.

He warned that the war in Ukraine could causes the cost of materials such as steel and rebar to increase even further.

CMIC Tijuana president Jesús Octavio Ruiz Vargas asserted that the cost of materials – up by 17.4% annually in December, according to national statistics agency INEGI – has increased by as much as 100% over the past year.

He told the news website Uniradio Informa that steel had doubled in price over the past 12 months, concrete had risen 40% and wood had increased by 20%. Ruiz also said that the cost of labor had gone up by 20%.

Despite the increased costs, construction in Tijuana hasn’t slowed, he said.

“Medical tourism projects haven’t stopped, vertical housing projects haven’t stopped, … industrial developments and commercial developments haven’t stopped. There is still demand in Tijuana despite the increase in construction prices,” Ruiz said.

It’s a different story in Puebla, where the recovery of the construction sector from the pandemic-induced downturn has stalled due to the increase in the cost of building materials, according to CMIC Puebla president Héctor Alberto Sánchez Morales.

He said the war between Russia and Ukraine has affected both the availability and cost of materials such as steel, aluminum, paint, glass and cement.

Sánchez said there had been “a little bit of activity” and “a little bit of growth” in the construction sector but the increase in the cost of materials ended the recovery in the first quarter of this year.

The price of many other products has increased in Mexico as higher global demand for goods, ongoing supply chain disruptions, and the war in Ukraine, fuel inflation. Mexico’s annual inflation rate was 7.72% in early April, a 20-year high well above the central bank’s target of 3% give or take a percentage point.

With reports from El Sol de Mazatlán, La Jornada de Oriente and Uniradio Informa 

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