Construction material prices rising

Construction material producers all are planning to raise their selling prices to cover the higher input material prices.

Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA), said that the steel price keeps high, though the offered ingot steel has slightly decreased in the last couple of weeks. Explaining this, Mr Cuong said that steel mills now still use the ingot steel imported at high prices in the first quarter of the year.

In the north, round steel of the Thai Nguyen Cast Iron and Steel Company is selling at VND9,100/kg, while joint venture steel companies are offering at VND9,200/kg. In the south, the Southern Steel Corporation is selling round steel at VND9,150/kg, rolled steel at VND8,850/kg, while VinaKyoei at VND9,220/kg, and VND9,030/kg respectively.

The cement price has also been sharply increasing. In April, the sold volume of cement reached 3.5mil tones, according to the Vietnam Cement Association, raising the total consumed volume of cement in the first four months of the year to 11.18mil tones. The cement price stays at VND770,000-835,000/tonne in the north, and VND880,000-1mil/tonne in the south.
However, the prices of these products are bound to increase as the input material prices (coal, electricity, petrol) have increased.

Nguyen Van Nam, Director General of the Hoang Thach Cement Company, said that the higher input material prices have made the cement production cost increase by VND25-30,000/tonne. Meanwhile, the recent petrol price hike, which has caused the higher transport fee, has also put difficulties for cement producers. Hoang Thach’s cement is now selling at VND720,000/tonne (PCV 30) and VND750,000/tonne (PCV 40).

As the input material prices have increased in the last time, the HCM City People’s Committee has recently made the decision on allowing local enterprises to adjust the selling prices of steel and cement spontaneously. Local enterprises would be allowed to lower or raise the prices by 5% compared to the price levels announced by the HCM City Departments of Construction and Finance.

According to Mr Cuong from VSA, the ingot steel in stock by the end of April has reached 300,000 tonnes, enough to meet the demand for the production in May and June. The inventory finished steel is reportedly at 260,000 tonnes.

Experts said that the fact that China removes the scheme on 8% VAT refund to exporters would limit the exports of finished steel products to Vietnam. Less China-made steel would be imported to Vietnam as the product would be $35/tonne more expensive. As China-made steel would not be a big rival any more, local steel producers would be free raise the selling prices, which they have planned for a long time.

As for cement, though the inventory cement and clinker remain high at 2.1mil tones, and producers have promised to provide enough cement for the last months of the second quarter, the Taskforce on Domestic Market Monitoring has predicted that the cement price would increase in the second quarter.

According to the Vietnam Cement Corporation, the demand for cement would increase in the second quarter, the high construction season, estimated to reach 10-11mil tones. However, cement would not see sharp price increase as more cement plants will become operational in the time to come, ensuring the profuse supplies to the market.

Source: VNE