The skyrocketing steel price has brought all construction works to a standstill as the expenses for steel account for 25% of total cost.

Now contractors have to buy steel at VND12mil/tonne, much higher than the initially estimated level.

Hoang Chi Cuong from the Planning and Investment Division under the Industrial Construction Corporation said that contractors are weeping, because they cannot ask the investors to adjust the cost of the construction works.

Mr Cuong said that contractors are also facing big difficulties with the construction works which allow them to adjust the cost. The adjustment comes quarterly, while the steel price increases weekly. The pace of the works has been delayed because contractors need to wait for the approval from investors on cost adjustment.

The Hanoi Construction Company No 9 under the Hanoi Construction Corporation is executing several construction works invested by the National Administration Institute, Nguyen Ai Quoc Communist Party University. The company won the bids for the two projects three months ago, when the steel price was low. The company still does not know what to do with the projects when the steel price has risen to VND12mil/tonne.

“We have claimed for higher pay to investors, but they have not given any concrete commitments,” said an official from the company.

Phuong Kim Thao, Director of the Hanoi Civil Construction Joint Stock Company, said that he can see a lot of contractors give up the bids for fear that the rocketing steel prices would cause them lose. Meanwhile, a lot of state-funded projects are also facing the delay as the State has not agreed to adjust the construction cost.

According to the representative from the Thang Long Construction Corporation denied the information that the market is short on rolled steel. “We can get deliveries right now if we can pay high for the products,” he said.

Meanwhile, the steel price is forecast to keep rising in some days due to the escalating ingot steel price, expected to exceed the VND13mil/tonne level.

However, Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA) has informed a good news. Vietnamese steel mills have been trying to import ingot steel from non-China sources (Malaysia, Thailand), after they found out that Chinese companies try to push the ingot steel price up in order to boost finished steel exports.

Mr Cuong said that several contracts on purchasing ingot steel at $575/tonne that the Vietnam Steel Corporation and some other companies signed with Chinese suppliers have been cancelled. Local steel mills have found out other supplies which can provide ingot steel at lower prices, and this brings the high hope that the steel price would not increase further.

As relying heavily on import ingot steel, the domestic market has been wavering. Meanwhile, other South East Asian countries like Thailand and Malaysia, which are considered to have less potential in the steel industry than Vietnam, have not suffered such a bad impact as Vietnam.

Source: ThanhnienNews.