China scrambles for scrap metals with Vietnamese producers

Consumer goods producers have voiced their concern about the material shortage, because they cannot compete with Chinese businessmen in collecting scrap metals.

Instead of collecting scrap metals at the Mong Cai border gate in Quang Ninh province as previously, Chinese businessmen now come directly to material warehouses in the southern region, where they scramble for materials with Vietnamese producers.

According to Vietnamese companies which collect scrap materials, Chinese businessmen now come directly to localities to seek materials instead of waiting at the border gates, because they want to take initiative in controlling the material sources.

Quan, Head of the Business Division of Minh Quan Company in the Binh Tan District in HCM City, which specializes in collecting scrap materials to resell to producers, has affirmed that since late 2010, instead of waiting to get deliveries at the Mong Cai border gate, Chinese businessmen have been coming to the warehouses in districts 6 or Binh Chanh to buy goods.

According to Quan, Chinese businessmen mostly collect brass and they try to collect as much as possible. The businessmen pay 115,000 dong per every kilo of brass, or 10,000 dong per kilo higher than the price offered by domestic companies. The competition proves to be less stiff in collecting bronze because of the high prices and short supply.

Previously, domestic scrap metal companies could seek supplies from the warehouses in western provinces of the south and Cambodia as well. However, they have lost the supply sources recently. A representative from a company admitted that since Chinese businessmen jumped into the market, domestic companies have to pay higher for scrap materials, and they also have to pay in cash immediately when getting deliveries. Meanwhile, they were allowed to defer payments in the past.

Truong Son, Business Director of Phu Thanh Phat Company in HCM City, has also confirmed the scrambling for purchasing scrap metals between domestic and Chinese businessmen. “They (Chinese businessmen) mostly collect brass and nickel,” Son said.

Hai from Quang Tuan Company in Binh Chanh District in HCM City, said that the companies which have good relations with suppliers, still can gather the volumes of goods they need.

Vietnamese consumer goods producers have voiced the same complaint that they are facing difficulties due to the material price increases and the lack of materials. Le Thi Le Hang, Head of the Business Division of Happy Cook Company said that the company has always been told to wait when it seeks to purchase aluminum, copper and inox materials, because all the materials have run out.

The owner of an aluminum production workshop in District 6 in HCM City has also complained that Chinese businessmen scrambling for collecting materials have led to the fact that small enterprises do not have materials for production. According to him, the aluminum material price has increased dramatically by 30 percent from 23,000-25,000 dong per kilo to 33,000 dong. Previously, empty cans were profuse and suppliers would bring goods directly to producers, while producers now have to spend time on seeking material sources.

“If you discover any supply sources, you should make deal immediately with them and pay at once, or you will miss the opportunities to purchase materials,” he said.

As a result, small companies, which always lack capital for production, now have to face bigger difficulties, because they have to borrow loans from banks at high interest rates in order to make payments right on getting deliveries

Higher material prices, higher interest rates and material shortage all have burdened consumer goods producers

“The sale prices of finished products have increased by 5-10 percent only, while the input material prices have been increasing continuously,” the workshop owner in district 6 said. – SGTT

Tags: scrap metals