Possible power price hike to increase Vietnamese production costs by US$35m

Vietnamese cement producers can expect a production cost rise by around VND800bn (US$35.2m) annually if a hike in power prices comes into effect, according to local industry sources.

Vietnam’s Prime Minister, Nguyễn Xuân Phúc, recently approved a 6.08 per cent rise in retail electricity prices to VNC1720.65/kWh (excluding VAT), effective from 1 December.

If the price hike is extended to industrial power prices and given the country’s current cement output of 86Mta, the industry will see a rise of VND800bn in the cost of the 8.6bnkWh used by the cement industry annually. This will bring additional challenges to the domestic cement sector in a contracting home market in which it is difficult to pass on any cost increases in the selling price.

Moreover, it is expected to erode price competitiveness in its export markets, said Nguyen Quang Cung, chairman of the Vietnam Cement Association.