Since the beginning of 2022, several key construction materials in Viet Nam have seen sharp price hikes, putting significant financial pressure on investors, contractors and construction units.

Rising material prices are adversely affecting the progress of many construction projects. Construction workers are seen joining the building of a separate wastewater collection system and sewer lines to transfer rainwater to the Han River for the basin from Ho Xuan Huong Street to Da Nang’s border with Quang Nam Province under the Da Nang Sustainable Development Project. Photo: THANH LAN

In reality, rampant price hikes had hit contractors the hardest as they could no longer maintain a profit margin as input prices increased.

In the first quarter and at the beginning of the second quarter of 2022, businesses and construction contractors all received notices of price increases from suppliers of building materials.

Alongside hikes in the price of iron and steel (about 40%), that of almost materials such as cement, sand, stone, aluminum and glass are also escalating, pushing many construction contractors into financial difficulties.

Mr. Nguyen Thanh Hien, a construction contractor in the Euro Village 2 villa area, Hoa Xuan Ward, Cam Le District said that, recently, a number of steel supply companies such as Hoa Phat, Viet Duc, Viet Japan, Viet Y, Pomina and Thai Nguyen have announced that a rise in the price of rebar by several hundred VND/tonne. Thus, from the beginning of March until now, steel price has increased 3 times with a total increase of VNS1.6 million/tonne of steel.

As calculated, from the beginning of 2022 to now, steel prices have soared 6 times with a rise of 16.5 - VND17 million/tonne to about VND19 million/tonne.

Meanwhile, cement prices have recorded an up by 50,000 - VND100,000/tonne. Specifically, the Xuan Thanh Cement Joint Stock Company announced an increase of VND100,000/tonne for bagged cement products from March 20.

“Only in the first few months of the year, the price of construction materials increased sharply so many times that no contractor can stand if the contract has been signed in advance”, complained Hien.

Along with that, a series of other construction materials such as sand, concrete, graded stone, soil and sand for levelleing are also reporting price hikes.

A recent survey shows that the price of sand for levelling is about 150,000 - VND200,000/m³, whilst that of sand is 400,000 - VND450,000/m3, piped bricks ranging from 1,300 to VND1,400/piece, construction stones at VND310,000/m³; ceramic tiles up by about VND50,000/m2 to VND250,000 /m², wood plastic sheet for floor lining up from VND145,000/m2 to VND185,000/m², laminate flooring from VND300,000 to VND350,000/m², water-based paint from 1.2 to VND1.4 - 1.7 million /barrel.

The prices of interior decoration items have also climbed by 25 - 45%, depending on each item.

The price of construction materials has currently increased by about 10% from the pre-Lunar New Year period.

Up to now, the price of construction materials has increased, making it difficult for contractors and construction units. Many construction material suppliers said that they are witnessing the price of building materials and products related to civil construction skyrocketing.

Mr. Vo Van Toan, Director of Construction Design Consulting Company, said that, steel prices in the Vietnamese market in April 2022 has remained high.

Specifically, the price of Hoa Phat CB240 coil in the North is VND18,940/kg and D10 CB300 rebar is offered at VND19,040/kg, whilst for the central and southern regions, it ranges from 18,890 to VND19,090/kg.

In a similar vein, the price of raw materials as well as the price of gasoline and oil has climbed continuously, which has pushed the transportation fees up, so the suppliers will have no choice but to increase their products’ prices.

While contractors have signed a contract with investors should not be able to increase the price, so the risk of loss or little profit may be very high in 2022, even many projects fall further into behind schedules if prices do not ‘cool down’.

According to calculations made by many construction contractors, each project is only about 3 - 5% profit whereas the price of construction materials has increased in recent years by more than 10%, so contractors will surely suffer a loss if they continue to execute the construction works.

According to the representative of the contractor consortium of the 126 - 545 - Thuy Ha Noi - Da Nang Urban Construction Investment companies is joining the upgrade of DT 601 route, never before have construction contractors faced such difficulties as now. In the situation of ‘price storm’ of construction materials, construction contractors fall into the situation of ‘the more they do, the more they lose’.

In the face of a continuous increase in the price of construction materials, Deputy Minister of Construction Bui Hong Minh signed Official Letter No. 959/BXD-KTXD dated March 23, 2022 requesting localities to prevent price speculation and promptly announce unit prices of materials in line with the market facts in a bid to support contractors.

If this situation continues for a long time, it will cause difficulties and problems for the preparation and management of construction investment costs, construction contracts, affecting the implementation progress and capital disbursement of projects.

Reporiting by THANH LAN – Translating by A.THU