Vietnam Ministry denies cement price hike

Vietnam Ministry denies cement price hike
Published: 26 March 2008

The Ministry of Construction has rejected rumours circulated in the local media that cement prices had increased 40 per cent since the end of 2007 or that cement supplies were scarce.

Deputy Minister of Construction Nguyen Tran Nam said at a meeting with 24 cement enterprises in Ha Noi last Friday that, in the last few years, the price of cement has been raised only once, by 10 per cent, and the adjustment was made late last year.

Despite price increases in materials used for cement production, such as clinker, cement companies have committed not to raise prices.

"The ministry has inspected all cement producers and importers," Nam affirmed. "No units have raised prices."

According to the Ministry of Industry and Trade’s Trade Information Centre, the nation’s cement makers produced 5.6 million tonnes during the first two months of this year. Prices now range between VND810,000-900,000 ($50-56) per tonne at plants in the north, and from VND950,000 to VND1 million ($60-62.50) per tonne in the south.

He cautioned, however, that "from July 1, whether cement prices will increase or not will be subject to the costs of fuel, electricity and coal. However, cement prices will remain stable, at least in the second quarter."

Prime Minister Nguyen Tan Dung issued a directive on March 15 stating that the Government’s priority now was to curb inflation, so the prices of coal and electricity have been temporarily capped.

Electricity of Viet Nam (EVN) in late February said the the price of electricity for industrial users would rise 7 per cent, from VND857 to VND917 ($0.0535-0.0573) per kWh. At the same time, the Viet Nam National Coal and Mineral Industries Group (Vinacomin) has spread the word that coal prices would go up 82 per cent on April 1, said Nam.

The Ministry of Industry and Trade’s Trade Information Centre has confirmed as much, saying that Vinacomin’s 3B product would increase from VND750,000 to VND1.6 million ($50-100) per tonne, while its 3C would increase from VND610,000 to VND1.3 million ($38-81) per tonne.

Nam said, if these coal prices hold, cement prices would have to increase by VND50,000 ($3) per tonne. The ministry, he said, would issue a document proposing that Vinacomin strictly obey the Prime Minister’s direction on prices.

Meanwhile, demand for cement was expected to grow 14 per cent during the first quarter of this year, compared to an average of 11-12 per cent in previous years, said Nam. Infrastructure and housing projects was driving demand, he said, "but supply can absolutely meet demand."

Volumes were stable, he noted, with major joint ventures like Chinfon and Holcim committed to increasing capacity by some 10 per cent or two million tonnes. Reserves were also at secure levels.

The master plan for the cement industry approved by the Government projects that 10 additional cement plants would go into operation this year, adding another 10 million tonnes in annual capacity. In early April alone, five more plants were to go online.

"The ministry has charged cement companies, including the Viet Nam Cement Industry Corporation, to ensure the progress of projects despite fluctuations in raw materials," said Nam.

Cement producers expected to import around four million tonnes of clinker, sufficient for market demand.

"But the problem is that the price of imported clinker has grown close to domestic cement prices, so companies are seeing losses."