Issue Focus

Recently, there has been a serious shortage of construction materials, mainly steel rebar. In particular, reinforcing bars rose sharply. In the first week of May, the transaction price of steel rebar was 930,000 won per ton (based on wholesale and cash payment). It is the first time in 13 years since the steel rebar crisis in May 2008 that the price of rebar exceeded 900,000 won per ton, and many small and medium-sized construction companies are experiencing construction material supply and demand problems. As a result of analyzing the recent situation internally and externally, the recent material crisis is expected to continue for a long time rather than just one year, unlike in 2008, so the government's active intervention is required. As a result of analysis based on the Industrial Linkage Table of the Bank of Korea, if the price of major metal materials used for construction production rises by more than 20% compared to the previous year, partial losses are expected to be inevitable and if the price rise over 40% compared to the previous year, substantial losses will be unavoidable for construction companies. Due to the domestic distribution structure, the damage caused by the rise in material prices is expected to be concentrated on mid-sized and small-sized construction companies. This paper reports about recent construction material price situation and analizes the reasons and sugests some policy to respond. The government should actively expand steel production to minimize ecnonomic damage, and respond in stages while checking the construction production system. Domestic steel rebar production has declined for three consecutive years since 2017 due to the sluggish construction industry. Considering the decline in imports from China and the recovery of construction investment in the future, it is necessary to increase production by at least 10% compared to the previous year. The inspection of the construction production system consists of ① preparing guidelines and standards to reflect the latest actual unit prices of major materials when calculating construction costs, ② responding to the supply and demand for construction materials(making guidelines, strengthening countermeasures against unfair practices, extending the construcion period), ③ standard contract for private construction works needs to be revised.