Vietnam cement prices likely to climb this year

Vietnam cement prices likely to climb this year
Published: 24 January 2007

Domestic cement prices are likely to increase by roughly VND20,000 to VND30,000/t this year due to the hike of power and coal prices, according to the Construction Ministry and the Vietnam Cement Association.

The two bodies said the price of power is slated to rise in a couple of weeks by 7.6 per cent, while coal will jump by 20 per cent.

The cement association calculated that with the increasing rates of power and coal prices, the cement price hike must be higher; however, domestic cement producers haven’t imposed further increases, anticipating a flood of foreign cement in the local market shortly after WTO accession.

The Construction Ministry forecast domestic cement demands will continuously increase until 2010, but with about 30 production plants churning out roughly 44.4Mta of cement will exceed demand.

In other markets, products of the local construction materials industry, including ceramic tile and construction glass, are facing similar WTO-related pressures to compete on a global scale.

Experts said difficulties are currently double for the industry’s production as it has to compete against import products in the domestic market sans any State assistance or preference.

The Construction Ministry’s statistics reported the domestic construction materials industry has so far met up to 90 per cent of the country’s demands.

Meanwhile, the industry’s export target still looms as the quality, price and pattern of its product, as well as the marketing ability of its businesses, have remained restricted compared with international construction materials producers.

Dr Doan Ke Bon from the Trade University’s International Trade Faculty said the quality of Viet Nam’s construction material products is worse than that of other regional producers and does not meet market demands.

Bon said abundant and cheap labour force doesn’t give the industry a competitive edge over foreign producers. For example, he said, a kind of Thai porcelain basin sold in Cambodian market is priced at US$6, equivalent to HCM City prices.

Domestic construction materials producers said its prices remain high because of the industry’s expansive input cost, including power and transport charges.

The director of the Price Forecast Department at the Institute of Market Prices, Pham Minh Thuy, said it remains difficult for domestic construction material producers to expand the market because of infrastructure restrictions, shortage of capital and antiquated technology.