Construction steel prices show signs of unusual increase that need to be controlled

According to experts, it is normal for raw material prices to increase or decrease according to the general level of the region, butsteel prices riseRecently, there have been signs of abnormality. The current solution is to strictly control the market and avoid speculation and profiteering.

In an official dispatch sent to ministries, branches and localities, the Ministry of Construction assessed: Recently, the Covid-19 epidemic continues to have complicated and unpredictable developments and the prices of some major construction materials tend to increase, especially steel prices have increased dramatically, not following the normal price increase pattern, which has negatively impacted construction investment activities.

The continuous increase in construction steel prices in recent times is causing a series of businesses in theconstruction industrystruggling, even possibly bankrupt if raw material prices continue to increase in the coming time.

Construction steel prices show signs of unusual increase that need to be controlled

Difficulties and losses are common in construction businesses at this time, because most projects and works are agreed upon in advance. The price of raw materials has increased so much that businesses cannot react in time.

In 2021, Vietnam's construction steel is expected to increase by about 2-3% compared to 2020, equivalent to about 11 million tons. Meanwhile, domestic production capacity is about 14 million tons, ensuring domestic consumption demand. According to the Vietnam Steel Association, although there is no shortage of supply, steel prices have continued to increase in recent times, possibly due to some speculators hoarding steel sources and a simultaneous price increase.

To stabilize supply and demand in the coming time and not let steel prices cause anxiety in public opinion, the Vietnam Steel Association said it has sent a dispatch to member enterprises recommending to continue to promote capacity, boost production of steel products, and organize a reasonable distribution system to stabilize domestic supply and meet market demand.

Mr. Nguyen Quoc Hiep - Chairman of the Vietnam Association of Construction Contractors suggested: "There are also certain impacts fromsteel marketin the region, but an increase of 40%, we think this figure needs to be provided by steel manufacturers themselves. We think that, currently, it is almost a uniform price increase, so there needs to be effective measures from management agencies.

The current problem is that State management agencies need to have effective solutions to reduce steel prices, contributing to solving difficulties for businesses and also a solution to control inflation and stabilize the macro economy. However, the proposed administrative solutions must be consistent with the general developments of the domestic and regional markets.

Dr. Nguyen Xuan Thanh - Lecturer at Fulbright School of Public Policy and Management Vietnam said: "The recent steel price fever is not long-term, nor is it a basis for us to immediately adjust policies. Steel price fluctuations are long-term. If prices continue to increase, we also need to adjust import tax policies to make domestic prices increase more slowly than world prices."

According to the assessment of the Ministry of Construction, in many localities, the construction departments announce construction material prices slowly, do not update price fluctuations in a timely manner or have updated but are not close to market developments. In light of the above situation, the Ministry of Construction requests the People's Committees of provinces and cities to direct the construction departments to coordinate with relevant agencies to regularly monitor and closely follow market developments to promptly update and adjust the announcement of construction material prices and construction price indexes to suit the new price level, avoiding the impact of speculation and price inflation of construction materials.

For major materials with large price fluctuations such as steel, if necessary, construction material prices must be announced monthly or earlier to meet the requirements of managing construction investment costs and construction contracts in the area./.