Hanoi (VNS/VNA) - Despite expectations that thedemand for iron and steel will rise due to the government's efforts to reducesupply by disbursing public investment, removing funding for keyprojects or focusing on social housing projects, the cost of constructionmaterials remains stubbornly high.

According to contractors and investors in Hanoi, while the priceof cement has stabilised, other essential building materials such as steel andconstruction sand continue to increase in price.

This trend has made it difficult for businesses to acceptcontracts for construction projects that require large amounts of steel, asthey fear heavy losses if the price of steel continues to rise.

As a result, many construction projects remain unfinished, asbusinesses are unwilling to take on the financial risk of completing the work.

A director of an enterprise specialising in the construction ofbridges and roads said that every time a supplier sent a new quote, it was like"sitting on a fire".

Since the beginning of this year, the price of CB240 coil and D10CB300 reinforcing bars after at least five adjustments has reachedapproximately 16 million VND (678 USD) per tonne. Hoa Phat steel bar prices inthe south rose by 200,000 VND per tonne on March 6, and it is expected to beapplied in the northern market too.

The price of construction sand after the Lunar New Year has soaredbecause many agent owners reported scarcity due to decreasing supply.

Construction enterprises, which already had difficulty inmaintaining their cash flow, high borrowing costs and many debts from thedeclining real estate market, are now gradually "getting hit" byfluctuations in the price of building materials.

Some experts predicted that if this situation persists, the numberof companies with sufficient capacity and quality in the construction industrywould be counted on one hand in the next five years.

Data from the business registration authority shows that the wholecountry had 51,401 enterprises withdrawing from the market in the first twomonths of this year, a year-on-year increase of 14.5%.

Among 17 business lines, construction and real estate businesseshave a very high number of enterprises suspending business with more than 7,180enterprises.

The construction industry has 5,525 enterprises registered tosuspend their business, up 22% year-on-year.

Similarly, 1,660 enterprises in the real estate industryregistered to suspend their business in the past two months, up 57%./.