"Steel is Gold...and is Still Hard to Find"

“Work has been suspended for more than 15 days. The market steel price has jumped 50 percent in two months, but it is still not easy to find if we don’t have any suppliers.”

Chung Seung-man works for the Bando Environment and Development Company and is a director of the construction site of Topyung high school located in Guri, Gyeounggi province. Chung said yesterday that this official project is sponsored by the Public Procurement Office but has yet to receive any notice of impending steel supplies from the agency. “The construction work must be done by September, but we are at a loss at this moment,” he said.

This company obtained an authorization for building a gymnasium in a high school after having received an order from the Gyeounggi Provincial Office of Education on February 16. By this time, the workers have to be in the middle of setting up posts to solidify the fundamental ground using steel. However, far from hearing the sounds of staking off, only a few workers could be seen at the construction site. Temporary fences were loosely surrounding the site as a sign of the construction area.

A worse case is another construction site where a new school is planned to open next year. Hundreds of primary, middle and high schools in Gyeonggi province are scheduled to be opened in 2005. But most of them are having difficulty purchasing steel, and therefore are behind schedule on their construction plans.

“Framework constructions that demand a large volume of steel have to be done by now in order to open those schools next year, but they are being replaced with other works because of the lack of steel materials,” an official of the facility department of Gyeonggi provincial office said. “If the steel crisis lasts far longer, we may be hurt by the delayed construction.” Furthermore, an increase in the budget originated by the surging price of material from 400,000 won per ton last year to 600,000 won per ton is another burden.

Ultra Construction Co., one of the leading construction companies in the nation, has been working on its construction project in the lower-current area of Mang-woo Mountain. In order to prevent damage from flood, this site has been designed to temporarily save water from the less-pressured outfall. However, bringing the steel into this area has been suspended since December of last year. “Although our situation is far better that other sites, we will run out of steel in 20 days,” site director Ahn Sang-shik said. “The head office urgently got involved in procuring materials.”

The case is similar to what large companies have been experiencing as well.

A director in the steel supply division of a big construction firm said, “Big companies also can merely provide around 60 percent of the requested volume of steel from the site. If the steel crisis prolongs itself further, construction sites across the country will face difficulties in meeting their deadlines.”

Lately, the shortage crisis in materials at construction sites does not only impact steel, but is also likely to expand to sand, aluminum and other raw materials.

Shim Myung-sup, a director in the supply division of Daewoo Construction said, “What is being demanded immediately is sand. Small companies have just seven days worth, bigger companies 15 days, and far bigger companies have only one month’s worth of sand in stock, which forecasts a total stoppage of ready-mixed concrete companies if the crisis continues any longer.”

Construction industries said it is clear that the situation of procurement will get worse as the spring season approaches. But they were of the same opinion that industries have not handled this material crisis competently, and are asking for the government’s active involvement to control rush purchases, to secure raw materials and other assistance measures.

Kwang-Hyun Kim Cheol-Yong Lee kkh@donga.com lcy@donga.com