Contractors fret as Vietnam steel prices scale new peak

With domestic steel prices up nearly 8 percent in 10 days, contractors are caught in a dilemma: continue work and suffer losses or suspend work and suffer fines. The Vietnam Steel Corporation (VNSTEEL) has upped its prices by 7.6 percent for both rolled and bar products.

Its rolled steel prices reached VND18.57 million ($807) per ton, which is higher than the historic peak of VND18.3 million reached last year.

Prices have been rising on the back of global price rises. Steelmaker Hoa Phat Group has increased its D10 bar prices to VND18.43 million per ton Mar. 11 from Mar. 1’s VND17.42 million.

Friday’s was the third hike within over a week without a downward adjustment in between.

The Vietnam Association of Construction Contractors (VACC) has warned that high construction steel prices will drag the industry down.

It estimates that steel makes up 18-20 percent of the costs of building high-rise apartments, and the proportion is even higher for bridges and roads.

Prices of other construction materials have also gone up. The association has asked the authorities to take price stabilization measures, but this has not happened yet.

“The construction industry makes up for 8-9 percent of Vietnam’s GDP, thus any disruption can affect Vietnam’s growth target,” Nguyen Quoc Hiep, VACC chairman said.

Many contractors are in a dilemma of whether to keep construction going at losses because of high material prices, or stop working and be penalized for slow progress, he said.