Responding to rising material prices

Many solutions such as cost management, contract offsetting, and supply chain linkages are being implemented by contractors.

Since the beginning of March, the construction materials market has seen a sharp and widespread price increase, from steel, sand, and stone to cement and concrete.

Cut costs, renegotiate contracts.

According to the latest announcement on March 30th, the North Central Vietnam Office of Hoa Phat Group Co., Ltd. - Binh Dinh increased the price of ribbed steel bars and steel coils by 600,000 VND/ton, while wire rod steel coils increased by 400,000 VND/ton. Previously, enterprises belonging to Hoa Phat Group had adjusted steel prices several times, each time increasing by about 200,000 - 300,000 VND/ton depending on the type.

Not only Hoa Phat, but a number of other steel companies have also simultaneously increased prices. Viet Y Steel Company just announced an increase of 300,000 VND/ton for rebar and 200 VND/kg for steel coils. Viet Duc Steel and Vina Kyoei also raised their selling prices by a similar amount.

Not only steel, but other materials such as sand, stone, bricks, and concrete have also seen sharp price increases. Brick prices have risen from 1,800 VND to 2,100 VND per piece (excluding transportation costs); black sand prices have increased from 470,000 VND to 570,000 VND per cubic meter, while yellow sand prices have risen from 750,000 VND to 800,000 VND per cubic meter. Notably, M300 ready-mix concrete has increased from approximately 1.1 million VND per cubic meter to nearly 1.5 million VND per cubic meter in just a few weeks.

Mr. Truong Dinh Thi, Director of Dori Construction Company (Ho Chi Minh City), said that construction material prices have increased by 50%-60% compared to last year, and by an additional 30%-40% since the beginning of this year. "Many signed contracts now need to be renegotiated with investors to compensate for losses. But for projects nearing completion, adjustments are impossible; it's like working for free," Mr. Thi shared.

According to Mr. Thi, when signing the contract with the homeowner, the price of sand and stone was only about 40%-50% of the current price. Even after accounting for inflation, the contingency fund was only 10%-20%, which is not enough to compensate for the actual increase.

Dr. Le Nhu Thach, Chairman of Bcons Group, believes the underlying cause is the increase in fuel prices due to geopolitical fluctuations, leading to escalating production and material transportation costs. "In just a few weeks, the price of concrete has increased by approximately 100,000 VND/m³, reaching nearly 1.5 million VND/m³. The cost pressure is enormous," he said.

Faced with this situation, Bcons had to review the progress of its projects, temporarily suspend those that had not yet been launched, and accelerate ongoing projects to maintain its reputation. "We were forced to cut costs, reduce unnecessary labor, optimize materials, and even consider using recycled materials. Not incurring losses during this period is already fortunate," Mr. Thach shared.

According to Dr. Pham Viet Thuan, Director of the Institute of Resource and Environmental Economics in Ho Chi Minh City, in the context of the government setting a double-digit growth target for 2026, public investment is considered a crucial driving force. However, escalating material prices are becoming a major pressure. "Projects using the state budget, especially lump-sum contracts, will face significant difficulties because costs will increase but cannot be adjusted," Dr. Thuan warned.

Many construction projects have been halted due to the excessively high cost of building materials.

Linking to form a supply chain.

The Vietnam Association of Road Transport Infrastructure Investors (VARSI) has submitted a document to relevant ministries and agencies recommending close monitoring of market developments in order to promptly implement solutions to stabilize fuel and input material prices.

At the same time, VARSI also hopes that the authorities will develop a mechanism to update and adjust the construction price index to reflect reality, creating a legal basis for investors and contractors to adjust contracts and limit financial risks. For projects severely affected, VARSI proposes considering extending the deadline, as well as establishing a risk-sharing mechanism when costs exceed the total investment.

In addition, the association also requested that petroleum businesses ensure supply, prioritize key projects, and allow contractors to purchase fuel in large quantities to avoid construction disruptions. Market management of construction materials also needs to be tightened to prevent speculation and unreasonable price increases.

Sharing the same view, the Vietnam Association of Construction Contractors (VACC) believes that fluctuations in fuel and material prices are directly impacting construction businesses, especially transportation projects that use large volumes of fuel and bulk materials. Therefore, VACC proposes that the Government allow fuel cost offsetting in construction contracts from March 2026 until prices stabilize; and at the same time, establish mechanisms to control transportation costs and tighten material prices at the local level. In case of prolonged fluctuations due to geopolitical factors, the application of force majeure regulations should be considered to adjust contracts.

In addition, VACC proposes encouraging businesses to form supply chains to reduce risks related to supply and input material prices, thereby contributing to ensuring the progress of key national projects.

Closely monitor the declaration, listing, and distribution process.

Vice Chairman of Can Tho City People's Committee, Vuong Quoc Nam, has just signed a directive on strengthening measures to manage and stabilize construction material prices in the area amidst market fluctuations.

According to the People's Committee of Can Tho City, recently, the prices of many types of materials such as sand, gravel, stone, bricks, leveling materials, etc., have increased abnormally, directly impacting investment costs and construction progress of projects, especially key projects, public works and housing.

To promptly control the situation, city leaders requested departments, agencies, and localities to strengthen supervision of price declarations and listings, ensuring transparency and openness of market information. At the same time, they need to proactively prevent speculation, hoarding, and price gouging that cause instability.

Can Tho City also instructed the Departments of Agriculture and Environment, Industry and Trade, Finance, and Construction to coordinate in providing complete information related to supply sources, especially mineral mines; and to closely monitor the circulation and distribution of construction materials in the area.

C. Linh

Source: https://nld.com.vn/ung-pho-gia-vat-lieu-tang-196260330211854698.htm