Enterprises face difficulties because of high steel prices

Steel prices have increased by 40-50% since the beginning of the year, causing many businesses using this material to "stand still"

A survey by VnExpress  showed that a series of domestic steel producers such as Thai Nguyen Iron and Steel (TISCO), Southern Steel, Viet Duc, Tungho or Kyoei... all increased their steel prices from March and rapidly quotes increase by day from the beginning of April to now

Currently, Hoa Phat CB240 D6, D8 coil (diameter 6-8 mm) is offered at a price of 16.4 million dong per ton by dealers; CB400V rebar price ranges from 15.6-15.75 million VND per ton depending on the diameter

Similarly, Vina Kyoei Company quoted CB240 coil price at 16.5 million dong for D6, D8 and D10 at 15.4 million dong per ton. Meanwhile, Southern Steel brand also recorded VND 16.7 million a tonne with CB240 D10 coil and VND 15.7 - 15.9 million a ton of CB400V D10, D12 steel

Compared to the beginning of April, each ton of coil steel has increased by nearly 1 million dong and rebar increased by 1.5-2 million dong per ton. These prices do not include VAT as well as shipping costs to the site

Photo: Phuong Dong

The price increase helps the steel industry to benefit in price, but businesses that use steel as production materials or construction contractors fall into the situation of "standing still".

Making a bid estimate for a construction project in Hai Phong, Mr. Hai, an engineer at a construction company in Hanoi, had to change his spreadsheet three times in a week because of fluctuating steel prices. In fact, steel prices have increased "scattered" since the beginning of this year and into the "wave" cycle of galloping from the beginning of April

"There are steel enterprises in the first 10 days of April that have changed their quotation six times, with a total increase of over one million dong per ton. The constantly changing price makes the project estimator 'unknowing where to go. The project the company he received at the beginning of the year went from profit to loss because the price of steel increased by 40-50%," Hai said

For each civil construction project, steel usually accounts for 10-30% of the total project value, so the price fluctuation of this item has a strong impact on contractors. Many construction enterprises and contractors said that the increase in steel prices from the beginning of the year until now has seriously affected the efficiency of the projects they have signed with partners, the ability to receive contracts for such projects. contracted

"Currently, the contractors compete very fiercely with the bid price, so the expected efficiency is usually very low, only enough costs to maintain production and take cash flow to feed the apparatus. Every time such steel price increases, contractors more losses and more difficulties", said Mr. Quang Trung - Deputy Director of Long Giang Foundation Construction Joint Stock Company

For the supporting industry, iron and steel are the main raw materials. The price of this item has increased by nearly 50% since the beginning of the year, causing Mr. Ngoc - Director of Hanoi Trading Company to say that "enterprises hold losses". With signed contracts, Mr. Ngoc's company cannot increase product prices, but with future orders, he said, the price will certainly increase by 20-30%

Concerned that steel prices will continue to increase, businesses have had to advance large amounts of money to buy steel and keep it in stock. But not every time you want to buy, the goods are available. "Businesses who want to receive goods must notify a few days or a whole week in advance because steel is quite scarce, even businesses pay in advance for orders but still not sure," the director shared

Domestic steel enterprises explain the increase in steel selling price due to the high price of steel billet, steel scrap and input materials for steel production globally. Iron ore prices are currently above $170 a ton, up 55% from the end of 2020 and double the same period last year. Hot rolled coil also recorded an increase of 44% over the same period, the price threshold of $ 660 a ton. Not to mention, the shortage of steel supply and long delivery time in Europe and the US are also the reasons why steel prices have increased sharply

"We have tried to stabilize the market price, but the price of billet and raw materials increased continuously, forcing businesses to increase the selling price of steel products," a representative of Viet Duc Steel shared in a notice sent to customers

The steel price list is constantly changing, so agents quote to customers daily instead of weekly as before and do not forget to remind "quotes are for reference only at the time of making, prices may change"

Analysis of steel industry experts shows that the price increase cycle of this item will continue until the end of this year. Some major infrastructure and public investment projects are about to be implemented such as the North-South expressway, Long Thanh international airport, etc., along with the recovery of the real estate market, which will increase steel demand by 3-5%. compared to 2020

The increase in domestic steel prices is also due to the impact of demand on the world market when the supply is short and delivery time is long in the US and Europe. Not to mention the high demand for steel in China after the epidemic before the economic recovery momentum and economic stimulus measures such as infrastructure investment. In 2020, the country imported 38.56 million tons of steel, an increase of 150% over the previous year

Difficulty because of Covid-19 caused orders to "up and down", not many construction projects started, but because of the high volatility of steel - the main material of production, construction, construction contractors. , ancillary businesses said they had to refuse to accept projects and orders. "There have been at least two construction projects that Long Giang Company has refused to do since the beginning of the year because steel prices have increased too high, making sure to make a loss," said Deputy Director of Long Giang Company