[Audio] Why are material prices in Hai Duong high?

July 29, 2023 06:00

Recently, the prices of many construction materials have continuously increased, greatly affecting traffic works in the province.


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Despite accepting high prices, many contractors still cannot buy enough quantity needed for construction. In the photo: Construction of Dong Viet bridge approach road in Chi Linh (photo provided by the construction unit)

Recently, due to the scarcity of supply in the national market in general, Hai Duong does not have some types of materials in particular, so the prices of many types of construction materials for traffic works have continuously increased.

Prices are higher than other locations.

According to a survey by reporters, in each locality in the province, construction materials transported to the construction site have different prices. Phuong Hoang Construction and Trading Joint Stock Company (Hai Duong City) is constructing nearly 10 projects in the province, including major traffic projects such as the East-West axis of the province, the East-West axis of Kim Thanh district, and the Hai Duong City Ring Road I... Mr. Bui Thanh An, chief accountant of this company, said that in Hai Duong City, businesses are having to buy black sand for leveling the ground at a price of 190,000 VND/m3, yellow sand type 2 from 450,000 - 460,000 VND/m3, crushed stone type 1 (rock) 279,000 VND/m3, and stone type 1 x 2 at 350,000 VND/m3. Compared to the end of 2022 and the beginning of 2023, the price of yellow sand, black sand and slag has increased by 30,000 - 40,000 VND/m3. "The company must contact to buy these materials in the provinces of Ha Nam, Bac Giang, and Phu Tho. In the coming time, the company needs about 90,000 m3 of various types of sand and 45,000 m3 of slag, but the current situation of high prices and scarce supply makes us very worried," said Mr. An.

As a company located in Hanoi, An Phat Construction and Investment Joint Stock Company is participating in the construction of 2 projects in Hai Duong, including the East-West axis project in Kim Thanh district. Like many other contractors, this company has encountered many difficulties because the price of construction materials has continuously increased. According to Mr. Nhu Dinh Hinh, commander of the East-West axis project in Kim Thanh district, the company signed a construction contract with a fixed unit price. At the time of signing the contract (around mid-2022), the price of black sand was about 156,000 VND/m3, yellow sand 390,000 VND/m3. After that, the price of materials gradually increased, by June 2023 the company had to buy black sand for 205,000 VND/m3, yellow sand for 550,000 VND/m3. With the current price of materials, the company has to make up for the loss.

The two companies are also implementing many projects in other provinces. According to the company's calculations, the price of some construction materials for roads to the construction site in Hai Duong is currently 5-7% higher than in other places.

Sharing the same concern, Con Son Construction Materials Joint Stock Company in Cong Hoa Ward (Chi Linh) is constructing 2 projects in Chi Linh, including the Dong Viet Bridge approach road project. This enterprise is particularly worried when it has to buy stone now at 330,000 VND/m3 (an increase of about 50,000 VND/m3 compared to early 2023). Although accepting to buy at a high price, the company still does not have enough necessary materials for construction.


Road construction materials are scarce and prices are rising, greatly affecting contractors. In the photo: Construction of the East-West axis road in Kim Thanh district

Untie the knot

The main reason for the high price of construction materials in Hai Duong is due to the scarce supply. Some materials such as sand and stone are currently not available in Hai Duong, so businesses have to buy them from other provinces.

In fact, the price of construction materials at the construction site is made up of many factors, including the price of materials at the source of supply, transportation and loading costs. When the supply is scarce, the price of materials will increase. In addition, the price of gasoline has fluctuated continuously in recent times, the transportation distance to each construction site and locality is different, leading to each contractor having to buy materials at different prices. Localities that are further from the source of supply have higher prices for materials at the construction site. Not to mention the high price is also due to unofficial costs.

According to the reporter's investigation, the prices of construction materials in Hai Duong are announced monthly by the Department of Construction - Finance of Hai Duong, according to each locality, with many types of materials having higher prices than some neighboring provinces such as Hung Yen and Bac Ninh. However, these announced prices are not really close to market fluctuations. While construction material prices fluctuate weekly, even daily, the prices announced by the province are monthly and always lower than the actual prices purchased by businesses. According to the price list announced by the inter-department in January 2023 and June 2023, besides some materials with increased prices, many types of materials remain the same. Specifically, in January 2023, the price of grade 1 yellow sand was from 520,000 - 540,000 VND/m3, grade 2 yellow sand was from 410,000 - 421,000 VND/m3 depending on the locality, and the prices of these types of sand remained the same until June 2023. The price of black sand for landfill in January was from 162,000 - 179,000 VND/m3, and remained the same until June 2023...

The high prices of construction materials negatively affect public investment projects from the investment preparation stage to project completion. When material prices increase, investors must adjust and update bid package prices and contractor selection plans, and the risk of exceeding the total investment amount leads to the need to readjust the investment policy and project. For contractors, when material prices increase and there is a lack of supply, the project is at risk of being behind schedule, and businesses must compensate for losses and slow construction, reducing investment efficiency.

To partially resolve the difficulty in supplying construction materials, Hai Duong has accelerated the auction of mineral mining rights. By July 21, the Department of Natural Resources and Environment had successfully auctioned five mineral mines in Chi Linh, including hill mines for filling materials, and soil and rock mines for producing artificial sand. However, in order for these mines to be put into operation, many procedures need to be completed. Contractors have recommended that the provincial authorities consider and accelerate the procedures for putting qualified mineral mines into operation; at the same time, the announcement of prices for construction materials needs to be more timely and closer to market prices.

MINH HONG

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