Price hikes upset paper firms

The price of paper materials have soared in the last few months, causing difficulties for businesses operating in the industry.

General secretary of the Viet Nam Paper and Pulp Association (VPPA) Vu Ngoc Bao said major companies had not been able to run at full capacity, while smaller ones had temporarily ceased production because of increasing prices.

Bao said the price of pulp had reached US$1,000 per tonne; double that of the same period last year. Wastepaper prices have also increased six-fold over the corresponding period, climbing to $300 per tonne.

Despite the hikes, the paper market faces a lack of basic materials. Paper producers from Thailand and China have only provided a limited quantity, while domestic supply has not met current demand.

The surging prices have made companies which are in need of paper as raw materials increase the price of their products

Director of Minh Thu Co, Ltd specialising in paper packaging Nguyen Mai Minh Thu said because of the shortages, her company had had to pay cash in advance and could buy only a limited quantity of material, which had been capped by importers.

Head of the Viet Nam Packing Trading Company’s marketing department Truong Minh Tuyet said prices of different kinds of paper had increased 30 to 40 per cent in the last few months.

Tuyet said some companies were trying to negotiate with customers to increase product prices, thus helping them share the burden.

“However, few customers are willing to accept the suggestion,” she said, adding that they would cancel some contracts and bear the penalty if the prices continued to rise in the upcoming time.

Bao said several factors were responsible for the increased prices.

The world economic meltdown in 2008-09 had affected to paper and pulp production due to decreasing demand.

Forest fires in Argentina, the world’s largest pulp supplier, had contributed to the scarcity of paper materials as demand of paper has resumed.

He added that the country’s paper and materials had met only 40 per cent of its total demand.

He said the domestic paper productivity this year would reduce as paper mills had been operating below their full capacity due to material shortages.

“The increase in electricity, water and coal prices as well as foreign exchange and interest rates has also contributed to the surge,” Bao said.

He said the Government should have policies to encourage enterprises by lowering value-added tax to collect waste paper, rather than dropping VAT on imported products.

“The tax reduction will not only save domestic waste paper but reduce the trade deficit as well as production costs, thus easing the costs,” he said.

Viet Nam News

Tags: Vietnam paper, Vietnam paper industry