POSCO E&C Notifies Project Owners of "Middle East War Risks"... "Material Suppliers Report Supply Shortages"

Amid concerns over material supply shortages and rising construction costs at construction sites due to the impact of the Middle East war, POSCO E&C has preemptively notified some project owners of related risk factors.

According to industry sources on April 15, POSCO E&C recently sent a document titled "Report on Construction Delays and Cost Increase Risks Due to Deteriorating Construction Environment Such as the US-Iran War" to developers of several projects it is working on. The document informed them of potential issues that could arise at construction sites in connection with the Middle East war.

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POSCO E&C explained, "Serious material supply imbalances and sharp price increases are occurring across construction sites due to supply chain disruptions caused by the US-Iran war," adding, "This is an external variable that could not have been foreseen by anyone, including our company, and it is beyond the range of factors we can control."

The company went on to state, "Material suppliers are reporting difficulties in securing key raw materials such as naphtha, citing soaring international oil prices and exchange rates, increased transportation costs, and the blockade of the Strait of Hormuz. They have also notified us of plans to raise prices for key materials." POSCO E&C further stated, "There have been delays in the supply of major raw materials, including ready-mix concrete admixtures, steel plates, and thick steel plates. Due to global shortages of raw materials, it has become impossible to find alternative suppliers."

Additionally, material suppliers have notified the company that, "If the war is prolonged, halting material deliveries will be unavoidable," and added that "the range of materials affected by the war may increase."

A POSCO E&C representative clarified, "This notice is not an announcement of an immediate increase in construction costs," and explained, "It is intended as an advance notice regarding situations that may arise at construction sites in the future."

Meanwhile, according to the Construction Cost Management Center at the Korea Institute of Civil Engineering and Building Technology, the construction cost index has risen for six consecutive months, reaching a record high of 133.69 in February.

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