Sursa foto: Pixabay
The Competition Council has started an extensive analysis of the market for construction materials in the context of the signals regarding the increase of product prices, both on the Romanian market, but also at international level, according to a press release of the institution.
“Although, during the Covid pandemic, the construction sector managed to support the national economy to a large extent, this field is facing an increase in the prices of certain construction materials. Under these conditions, there is a risk of malfunctions in the supply of raw materials for ongoing investments, and with regard to new investments, entrepreneurs may have reservations about bidding, and may have difficulty in making fair and competitive bids due to budget overruns. Therefore, we want to identify the causes that generated these developments and to impose measures to improve the functioning of the markets “said Bogdan Chirițoiu, President of the Competition Council.
Thus, the Competition Authority will analyze the price evolution for the main construction materials (eg bitumen with road applications, BCA, bricks and ceramic blocks, polystyrene used for thermal insulation, iron, steel and rolled products, PVC and polypropylene products, cement, etc.) to identify possible market failures and the causes that led to the price increase.
Following the analysis, the authority may propose recommendations, respectively measures to remedy, mitigate and prevent any negative effects on competition and, implicitly, on consumers, and if it discovers violations of the law, it initiates the necessary procedures to sanction them.
Public procurement law, amended to reflect the price increases
Ludovic Orban, the president of the PNL, announced on Monday that the leaders of the governing coalition have decided to amend the legislation so as to allow the modification of public works contracts after the price of construction materials has risen massively.
“We discussed a very important topic and it must be mentioned because the local authorities, the builders, need to know. You know very well that, not only in Romania, in Europe we are facing a wave of increase in the price of construction materials and we decided to improve the legislation so as to allow the value of the contract to be updated according to the actual increases in the price of construction materials “. Orban said after the coalition meeting in government.
“It’s about how to index the value of contracts due to the increase in the price of construction materials and here we are talking about some unprecedented increases in prices for concrete, wood, copper, aggregates, ballast and all other construction materials for that otherwise there is a risk that many builders will not be able to complete their investment objectives without a correct mechanism for indexing the value of the contracts “, Orban added.
The explosion of prices
Romanian builders have been talking for some time about an explosion in construction materials prices, supply chain and labor problems and estimate that in the next period the situation will be reflected in the market for the final consumer.
We can expect an increase in the prices of new homes or even blockages in the case of certain projects and tenders, according to them. Contractors warn that future public works may not find builders.
In fact, we have a concrete situation, more precisely the construction of the new bridge over Siret, where the Italian company that won the tender refuses to sign the contract, three months after the designation, sources consulted by Economedia say that the association could not support the project due increase in prices for construction materials.
New “price lists”
Steel – increases of 110% in Italy, 70% in Germany and France, 64% in Spain. In Romania, the increase is 70%. Bitumen – increase of about 15% at Community level. Cement – 10% increase. Wood – growth of over 20%. Polyethylene products – increase of over 40%. Fuel – increase of 34%. These are the examples of price increases registered during the 1st quarter at the level of the European Union, invoked by the builders from the Romanian Association of Construction Contractors (ARACO).
Figures from the Federation of Employers of Construction Companies (FPSC), according to a survey conducted in April, show that members of the association in Romania reported significant increases in most construction materials: polystyrene – over 50%, pvc pipe – over 25%, PE pipe – 30%, galvanized sheets – 45%, ballast – 50%, sand – 40%, bitumen – over 30%, steel-concrete over 30%, diesel 18%.
For builders, including large companies in the field, the situation has become so serious that in May the strongest associations in the field even sent an official letter to Prime Minister Florin Cituu, signaling a “serious situation generated by the explosion of material prices and calling for “urgent measures to manage the problems”. Both the Romanian Association of Construction Entrepreneurs and the Federation of Employers of Construction Companies have requested meetings with the Prime Minister and the identification of solutions, “to avoid a situation of investment collapse.”
“I don’t think there is an area that is not affected by the rapid rise in prices”
The average price increase on the construction materials market is about 40%, says Cristian Erbaşu, president of the Federation of Employers of Construction Companies. If for some products there is talk of an increase of 10-15%, in the case of others it has even doubled.
Some of the largest increases were in the case of copper, an essential material for equipment and installations. There were also large increases in all petroleum-derived materials.
“All natural resources have become more expensive, there are big increases on the stock market. But there is also a crisis in terms of deliveries. Even if you are willing to pay more, there are problems with deliveries. I do not think that there is an area that is not affected by the galloping rise in prices. If the materials represent 50% of the work, with an average price increase of 40%, we are already talking about a 20% increase in contracts. No one can stand such a large margin. This means that all contracts become unenforceable. Or they are executable, but if the companies are willing to put their own money to bear the deficit. But you can’t support in this way all the contracts you have in progress “, says Erbașu.