Cement prices set to rise

The Vietnam Cement Corporation (Vicem) plans to gather its member companies to discuss market performance and price policies, according to interviews by Dau Tu Chung Khoan reporters

The move is very reasonable as electricity, coal, petrol and oil, and packaging price increases have made production costs for every ton of cement 100,000-120,000 dong higher.

Nguyen Van Tung, Chief Secretariat of Vicem, explained that an assessment of competitors’ capabilities as well as Vicem’s market share tops the agenda. This analysis will allow Vicem  to draw up measures to protect their market position against stiff competition.

According to Tung, Vicem has not made any decision on raising prices yet. “If we decide to raise prices, we will still need to think carefully to set up reasonable prices,” Tung remarked.

He added, “Member companies of Vicem will not spontaneously raise prices until the price increase plan is approved by Vicem.”

It is true that many Vicem member companies are attempting to increase prices, since production costs have risen. Other enterprises worry that price increases will lead to lower consumption and weaken competitiveness.

Luong Quang Khai, Director of But Son Cement Joint Stock Company, observed that input material prices have risen dramatically since 2009, creating enormous difficulties for business operations.

“We cannot balance our budget now because expenses have increased too sharply,” Khai complained. “If we don’t raise prices, we will incur losses. But if we do, we fear that our market share will narrow, while our competitiveness will weaken.”

He added that, in late 2009, as coal prices increased by over 60 percent, the  company had to raise price by 30,000 dong per ton, but cement sales declined by 30 percent in February 2010 compared with the same period of 2009.

According to Khai, if Vicem raises prices, this will help ease difficulties for businesses because they can partly cover their expenses. He also worries that enterprises may face unhealthy competition from companies that use any tactic, even unhealthy ones, to boost sales.

Forecasters warn that, in 2010, market competition will be stiffer than ever. It will also be the first time that Vietnam can churn out enough cement to meet domestic demand and will export a part of its output.

Though holding only 40 percent of the domestic market, Vicem remains a strong brand name because it owns others like Bim Son, Hoang Thach and Ha Tien.

VIetNamNet/DTCK

Tags: Vietnam cement, Vietnam cement industry, Vietnam cement prices