Local construction firms face the risk of bankruptcy as the price of steel has soared 40 percent recently.
The Hoa Sen Group's employee check products in a warehouse (Photo courtesy hoasengroup.vn)
Hanoi (VNS/VNA) -
Local construction firms face the risk of bankruptcy as the
price of steel has soared 40 percent recently.
price of construction steel is now nearly 19,000 VND per kg and with the
material accounting for about 28 percent of the building cost for an
apartment and 35 percent of the cost of a semi-detached house, insiders said
construction costs had soared.
Diep, Chairman of the Board of Directors of Hung Thinh Phat Investment Group,
said: "With urban areas, condominiums, iron and steel account for a
relatively large proportion of the product prices so house prices will
definitely be higher in the near future."
who is building three construction projects of apartments and townhouses
at a fixed price of 900 billion VND said he lost at least 8 percent of the
total contract value and lost all potential for profit.
Tran Hong Phuc,
General Director of Phuc Hung Holdings Construction Joint Stock Company, said:
"When the price spikes, the excess cost of the provision will also affect
the price range we offer to the market and buyers will be the last to bear the
Hoang Ngoc Tu,
Deputy General Director of Delta Group, which develops a lot of social
housing, said the increased materials costs will push even social housing
To deal with
the situation, the Vietnam Association of Construction Contractors (VACC)
recently sent a petition to the Government, asking for solutions to deal with
the sudden spike in construction steel prices.
petition said the high prices would make construction contractors nationwide
face the risk of going bankrupt as most of them were using fixed unit price
contracts without adjustments except in case of force majeure, so they could
not raise the prices of the houses.
proposed the Government direct ministries and branches to examine the
causes of the hike and ask the departments of construction to update the
market unit prices.
both the Vietnam Steel Association and the Department of Industry under the
Ministry of Industry and Trade said construction steel production capacity was
about 14 million tonnes per year, meeting domestic demand of about 11
million tonnes. However, construction steel shortages and strong price
increases were still occurring.
On the other
hand, the surge in prices of steel since the beginning of 2021
helped many steel producers record good performance in Q1.
Group (HSG) posted an increase of nearly 382 percent year-on-year in net
revenue to 9.1 trillion VND, leading to a rise of 215.8 percent in profit after
tax to 572 billion VND. Ho Chi Minh City Metal Corporation (HMC) also
witnessed strong growth in business results in this period
with its revenue rising 40.4 percent from the same period of 2020 to
more than 1.1 trillion VND.
Thu Duc Steel
JSC (TDS)'s revenue rose 22.7 percent year-on-year to 601.6 billion VND.
Its profit after tax also posted a gain of 45.5 percent to more than 12.8