Vietnam cement producers want coal price increase delayed

Vietnam cement producers want coal price increase delayed
28 March 2008

Chairman of the Cement Association Council Nguyen Van Thien on March 25 sent a document to the Prime Minister, asking him to instruct the Vietnam Coal and Mineral Industries (Vinacomin) to delay the coal price increase plan.

In January 2008, Vinacomin raised the price of coal sold to cement producers by 70%. On March 25, Vinacomin once more asked to raise the coal price. The continuous coal price increases may lead to the price increases of a lot of commodities and services, threatening to make the current difficult situation worse.

In the document sent to the Prime Minister on the same day, Thien said that the 70% coal price increase in early 2007 alone made cement production costs increase by VND30,000/t. Meanwhile, cement producers also have to pay more for fuel, transport fees and import materials.

Thien said that Vinacomin has called on the Vietnam Cement Corporation and other cement producers to go to Vinacomin’s office to negotiate the new coal sale price. The coal producer has announced its intention to raise the coal dust price 4A.HC to VND1.150mil/tonne, and 4B HC to VND1.1mil/tonne.

According to the Cement Association, the new coal price levels will make the production costs of cement increase by another VND40-50,000/tonne.

It has surprised many people that the decision on raising the coal prices was made by Vinacomin after the working session of the Prime Minister at the State Bank of Vietnam on March 15, when the he said coal and electricity prices would not be raised at this moment. At the working session, the Prime Minister emphasised that curbing inflation is the top priority task at this moment.

Thien said that the cement association did not anticipate that Vinacomin would raise coal prices at this moment. In Document No 9644 dated November 26, 2007 by Vinacomin, the group stated that it would raise coal prices two times in 2008, in January and in July.

The cement association said that cement producers had to commit they would not raise the sale prices of cement as requested by the government and the Ministry of Finance.

Meanwhile, they also have to pay more for transport fees to carry coal from the supplier to the cement plants. According to the cement association, Vinacomin charges VND98,000/tonne to carry coal from Ninh Binh port to Nho Quan cement workshop, while Nho Quan has to pay VND30-35,000 only if it hires other carriers.

A Deputy Minister of Construction said that the cement price can be stabilised only when coal prices are stable. He said that there is no legitimate reason to raise coal prices at this moment, especially as the country is fighting inflation.

When talking to the press recently, Director of the Trade Policies for the Domestic Market under the Ministry of Industry and Trade Hoang Tho Xuan said that if Vinacomin raised coal prices this would lead to the massive price increases of other products, which would make the fight against inflation impossible.

Thien in his petition wrote that all industries now want to raise sale prices to avoid losses. However, as fighting against inflation is the common task of all businesses and people, big general corporations have to share in the difficulties.
Published under Cement News