Construction firms face bankruptcy as steel prices soar

Local construction firms face the risk of bankruptcy as the price of steel has soared 40 per cent recently.

The price of construction steel is now nearly VND19,000 per kg and with the material accounting for about 28 per cent of the building cost for an apartment and 35 per cent of the cost of a semi-detached house, insiders said construction costs had soared.

Nguyen The 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."

A contractor who is building three construction projects of apartments and townhouses at a fixed price of VND900 billion said he lost at least 8 per cent 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 high cost."

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 prices up.

To deal with the situation, the Viet Nam Association of Construction Contractors (VACC) recently sent a petition to the Government Office asking for solutions to deal with the sudden spike in construction steel prices.