Gas, steel prices escalating

Many steel producers profit nearly one million dong per ton and gas sales agents enjoy high commissions, all thanks to the ongoing battle between gas firms to agent

Price increases are nothing new, but construction materials and gas prices have risen alarmingly in recent days.

Steel price skyrocketing

Contractors in HCM City said that the steel price has increased sharply by one to two million dong per ton since the beginning of March 2010.

Sales agents report that steel bar sold by Vietnam Steel Corporation is now 13.27-13.37 million dong per ton, plus tax, the price is 14.5-14.7 million dong.

The same can be said of steel prices offered by Pomina and other manufacturers. Only Vina Kyoei is still selling steel at 12.24-12.59 dong per ton. The manufacturer plans to raise the price next week.

Overall, steel products with well-known brand names have all exceeded 15 million dong per ton.

Steel producers say that the increases can barely cover the rise in cost of electricity, water and fuel. Meanwhile, ingot steel prices have also increased significantly.

Other sources argue that manufacturers are overcharging. Nguoi Lao Dongquoted a source from the Vietnam Steel Association as saying that the 6.8 percent electricity price increase could only make production costs of every ton of steel increase by 60,000 dong.

Moreover, the source states, higher fuel prices will only increase production costs by another 30,000 dong per ton. If counting the ingot steel price hike by $15-20 dollar per ton, production costs would increase by 400-500,000 dong per ton in total. In contrast, the steel price has increased by 1-2 million dong per ton within one month.

The source added that steel manufacturers are producing steel from cheap ingots they imported previously. It is estimated that the volume of imported ingot steel is high enough to cover production until the end of April 2010.

A steel manufacturer also revealed that its products are made with ingot steel it imported before, which means that the production cost per ton is 12.6 million dong.

Profits are thus estimated at nearly one million dong per ton for manufacturers.

The source revealed that even if ingot steel rose to $600 per ton, the production cost would be only 13.7 million dong

Gas sale agents earn 4000 dong per kilo

Gas on the world market has decreased by $12.5 per ton over the previous month, but domestic gas firms have raised the by 4,000 dong per 12 kg tank, citing the dong/dollar rate increase.

Current conditions do not support the price increase. Vietnam now has a new gas supply from Dung Quat factory, which provides 20 percent of the total demand. The gas sells 20 percent lower than Dinh Co Gas. Plus, the world price has decreased by $20 per ton to $702-703.

Experts say that under favorable conditions, gas firms should have slashed retail prices by 10,000 dong per tank. Instead, they have jacked up prices.

Gas firms must offer high commissions for sales agents after the new decree on gas trading management takes effect. Sales agents have to pay 230,000-235,000 dong per 12 kg tank to gas firms, while they can retail at 275-285,000 dong per tank, pocketing 40-55,000 dong per tank.

VietNamNet/NLD

Tags: Vietnam Gas prices, Vietnam steel prices