The price of construction materials, especially the high price of steel, caused contractors to struggle. Continued construction will certainly make a loss, stopping construction will violate the signed contract, greatly affecting the reputation of enterprises in the construction industry.
Steel Prices Set To Go Through The Roof
According to the Vietnam Industry and Trade Information Center – Ministry of Industry and Trade, iron ore prices in China, Singapore,… have been continuously going down since the end of May until now. Although the price of iron ore has declined, the domestic iron and steel price remains at the same high price as it was two weeks ago.
Hoa Phat coil steel is priced at 18.27 million VND/ton; D10 CB300 rebar is still priced at 17.81 million VND/ton. Or Viet Duc still sells CB240 coil steel price at 18.11 million VND/ton; D10 rebar is still 17.61 million dong/ton;… excluding 10% value-added tax and shipping fee from the factory to the user.
After many consecutive price increase announcements only a few days apart, up to now, steel prices can be temporarily considered “cooling down”, but still at a “heavenly” price.
Construction materials prices increase and risk of scarcity
Although not increasing continuously and gallopingly like steel, the price increase and the risk of scarcity of materials such as sand, bricks, cement,… also cause many difficulties for general construction contractors. As reflected by construction companies, at the end of the second quarter of 2021 compared to the beginning of the year, sand and stone prices increased by 15-20%, building bricks increased by 10%, cement, paving bricks, and concrete increased from 5 – 10%.
The price of backfill sand from 110,000 VND/m3 at the beginning of the year, has now increased to 210,000 VND/m3; construction golden sand has increased to 500,000 VND/m3.
Contractor struggle as materials prices surge
Material costs usually account for 40-70% of the total project cost. If 4-5 main construction materials such as iron, steel, cement, sand, stone, brick, etc. both increase in price, construction costs will be pushed up many times.
According to calculations by the Association of Small and Medium Enterprises of Nam Dinh Province, for civil and infrastructure works valued at VND 10 billion or less, the compensation value for input construction materials is up to about 600-700 million VND. For construction works under package price contracts, the problem of raw material price fluctuations causes many general construction contractors to struggle and fall into a dilemma: Continued construction will certainly make a loss, stopping construction will violate the signed contract, greatly affecting the reputation of enterprises in the construction industry.
As a general construction contractor who often signs a Lump Sum Turnkey contract with a package price, Delco also faced many difficulties during this period. However, Delco still tries to ensure the quality of construction as committed, balance costs and ensure the best price for the investor.
The constantly fluctuating material price situation requires Delco’s engineers and staff to focus on handling the workload 2-3 times higher than usual, always closely following the market, predict the next price increase and take continuous countermeasures. The digital transformation application in project management has helped Delco closely manage resources, speed up work processing, increase accuracy, and keep up with the market’s price increase.
Source: Steelonline.vn price list; Tuoi Tre Newspaper; Labor Newspaper