Inflated energy costs weigh on cement, steel industries

Inflated energy costs weigh on cement, steel industries
Published: 17 May 2007

Rising energy costs over the past three months have forced Vietnamese producers to keep steel and cement prices high, despite global commodity trends to the contrary.

Nguyen Tien Thoa, head of the Ministry of Trade’s Price Management Department, says the Government mandated fuel price hike in March caused a domino effect throughout April as companies grappled with inflated energy costs.

Higher energy costs have also had a similar impact on cement with prices rising to between VND880,000 to VND1 million a tonne, according to the Vietnam Cement Association.

With rising energy prices the cost of cement production in the first quarter rose by VND25,000-30,000 a tonne, said Nguyen Van Nam, director of Hoang Thach Cement Company.

The cement association expects the upward trend to continue in the near future because of price hikes over the last few weeks, which could have a long-term impact on the industry.

In addition, the summer months are approaching when construction tends to accelerate as developers try to take advantage of the dry weather. The cement association expects 10-11Mt of cement will be consumed in this period.