Steel prices skyrocketed, construction industry stagnated
TTO – Only from the beginning of the year until now, the domestic price of iron and steel has increased by 40-50%, making many house builders difficult because of the capital pool, many contractors falling into the situation of making profits, turning into losses, even going bankrupt.
Along with iron and steel, many other construction materials such as sand, cement, bricks… also splash water with the rain, causing construction costs to be pushed up, pushing the risk of house price increases right in the last months of this year.
Many contractors in danger of collapse
Having just received information about the 10th price increase of a steel enterprise in the South, Mr. Vu Huy Hoang – General Director of Hai Au Construction Engineering Joint Stock Company (HACO) – lamented the continuous price increase as follows: Recently, construction contractors did not dare to sign new contracts.
Meanwhile, previously signed contracts are falling into heavy losses because the price of steel and construction materials has spiked by 40-50% compared to the end of 2020. Only one project has more than 10 houses. in Long An for an investor, but only for steel money, HACO has to compensate 2 billion dong.
Specifically, for round steel (used to make reinforced concrete) at the end of 2020 with the price of 13 million VND/ton, last week it increased to 18.5 million VND/ton and at the beginning of this week it was up to 19 million VND/ton. But section steel and sheet steel (construction of factories) increased even higher.
At the beginning of this year, the price of this steel was 15-16 million VND/ton, but now it has reached 24-25 million VND/ton, up 66%.
“In just 5-6 months, the price of steel increases by 40-60%, so no contractor can stand it if they have signed a contract in advance, making sure to lose. Not only that, steel prices have not stopped showing signs of stopping. the construction industry fell into crisis.Contractors like us did not dare to bid, because if we bid high, we would surely lose, and if we bid low, we risk loss.
Our steel suppliers themselves also ask for a deposit to fix the price because they can’t know when steel factories will increase prices in the near future “- Mr. Hoang analyzed.
There are three civil works and have signed an agreement with the landlord on the construction progress, but Mr. B.T.H. – Director of M.K Construction Company (Tan Binh) – only completed a semi-detached house construction project after reaching agreement with the landlord on the fluctuation of steel prices.
According to Mr. B.T.H., when the company started to sign a contract with the owner in early April 2021, steel prices ranged from 18.4 to 18.75 million VND/ton. 10 days later, the price of steel jumped to 19.4 – 19.5 million VND/ton, causing him to struggle. Negotiating with the landlord is not complete, the company accepts to handle the cost of steel “team” up.
“So far, steel prices have continued to skyrocket to VND 19.8 – 19.9 million/ton, an increase of about 4% compared to two weeks ago. And in price negotiations with customers from the beginning of May 2021 to present. , I clearly state that when the steel is delivered to the project, the price will be fixed” – Mr. BTH expounding.
According to construction contractors, for residential houses, round rebar accounts for about 10-20% of the value. With iron and steel factories accounting for 25 – 30%. Thus, for steel alone, the contractor has lost about 15-20% compared to the winning bid. For residential houses, the cost increased by 15-20%, while factories increased even more.
If in the past, a bid project was 100 billion, now it has to be up to 130 billion to dare to accept. While for the construction industry, the profit rate of medium-sized contractors is at 5-6%. For civil works, the construction period is usually 1 year or more, so the risk of being affected by price slippage is very large.
With prices rising like the past time, many construction companies fell into crisis, even collapsed.
According to Mr. Vu Huy Hoang, not only iron and steel, petrol prices have also increased, making the cost of transporting raw materials increase by 20-30%, sand and stone prices by 15-20%, building bricks by 10%, and cement by 10%. increased, tiles increased, concrete increased… 5 – 10%.
“We have had applications sent to investors to support the price of steel rising too hot, but have not received any sharing” – Mr. Hoang said.
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