Rising Construction Material Costs Strain Vietnam's Building Industry

The Construction Industry in Vietnam Faces Significant Pressure due to High Costs of Building Materials.

Recently, construction contractors and investors in Hanoi have reported that although cement prices have stabilized, other essential materials like steel and construction sand are still experiencing price hikes. Despite expectations for an increase in the demand for iron and steel as a result of government efforts such as reducing public investment funding or focusing on social housing projects, the overall costs for building materials remn high.

This rise in material prices is causing substantial stress on businesses that undertake large-scale steel-based construction projects; they are particularly concerned about potential losses if steel prices continue to increase. As a result, numerous construction projects are being left incomplete due to the unwillingness of enterprises to shoulder these risks financially.

A director from an enterprise specializing in bridge and road constructions has expressed the challenges faced when receiving new quotes from suppliers: Every quote is like sitting on a fire.

Since the beginning of this year, the prices for CB240 coil and D10 CB300 reinforcing bars have been adjusted at least five times and now amount to roughly $678 per tonne. In March, Hoa Phat steel bar prices in the southern region increased by $200 per tonne and are anticipated to follow suit in the northern market.

Moreover, the soaring cost of construction sand post-Lunar New Year has been attributed to a decrease in supply due to reduced avlability from many suppliers.

The situation poses significant challenges for construction enterprises that were already grappling with difficulties like mntning cash flow, high borrowing costs, and accumulating debts from declining real estate markets. Now, these firms are also facing fluctuations in building material prices.

Some experts predict that the number of companies capable of delivering quality projects could decrease to a mere handful within the next five years under this condition. According to data from the business registration authority, there were 51,401 enterprises exiting the market during January and February alone, representing a year-on-year increase of 14.5.

Among these, construction businesses suffered the most with over 7,180 susping operations, which is a 22 increase compared to last year. In real estate, there were more than 1,660 firms registering for business suspension during the same periodan alarming increase of 57.

This highlights the critical challenges faced by the construction industry and its stakeholders in Vietnam due to high material costs impacting both operational efficiency and market stability.

Reference:

https:vietnamnet.vnindustry232841high-cost-of-construction-materials-puts-pressure-on-viet-nams-construction-industry.html
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