Steel rises, but at what cost?

Since you read this column two weeks ago, the price of steel in the region has shot up by more than 10 percent - and it was already high before that.

Since you read this column two weeks ago, the price of steel in the region has shot up by more than 10 percent - and it was already high before that.

In the same period, JCB announced that it was shedding jobs in the UK, due in part to the rising cost of steel worldwide.

It doesn't take a genius to work out that this affects our business in more than one way. For a start the cost of rebar will skyrocket, leaving site managers with less cash to pay the contractors. Secondly, the cost of machines will inevitably rise, which coupled with the soaring price of diesel will leave little for the pay increase that many operators are (quite rightly) demanding.

But why is this? Should the government in the UAE regulate the price of steel, as they have done with the cost per bag of cement? Possibly, but I fear that the solution is a little more drastic.

Simply, the prices are high, because of a peak caused by the region's drive to build everything at once. Mega-projects that would normally be built in phases are going up all at once, alongside other ever-more giant builds. Small wonder there are shortages in pretty much everything.

If the roll-out of project was a little more slow and controlled - sustainable, to use a current buzzword - then as a region, things might come in near budget.

However, if things keep running at the current eye-popping rate, paradoxically, expect ever more delays... and expect to pay the price.

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