To prevent further losses, the cement sector must raise prices due to the increasing costs of imported materials, according to the Vietnam Cement Association. The sector’s profits are expected to fall this year, after the import prices for coal, electricity, petrol, oil, transport and clinker increased. Profits fell from VND605 billion in 2002 to VND546 billion last year.
Nguyen Van Thien, the association’s chairman, said the rocketing prices of imported materials directly impacted production cost and trade, causing the average cement price to rise by more than VND28,000 per tonne.
Thien said the price of domestic cement was still lower than in 30 other countries. Average world prices range from VND1 million to VND1.25 million (US$79.617) per tonne, about $12 higher than Vietnamese prices. The Vietnamese dong lost value compared with the US dollar, therefore the domestic price fell from US$50 to $48 per tonne on average, but the price in dong remained between VND750,000 and VND850,000 per tonne.
The Vietnam Cement Association recently asked the prime minister to approve planned cement prices for 2005-10. Based on the increasing price of materials, cement prices should increase to $60 per tonne. On average, the price will rise by $2 per tonne every year from 2005 to 2010.
In addition to compensating for rising imported material costs, the increase in cement prices will ensure the sector’s average profit of 10 per cent for production and trade, Thien said . A portion of the profits will be used to maintain production and to invest in the sector’s development plan.
Thien said the price would be increased by early next year if the government approves the itinerary. The increase will help the sector mobilise capital from other economic sectors to invest in domestic production, he added.