Domestic paper more costly than imports

Paper prices have jumped despite low demand.

It is quite surprising since the paper market normally becomes busy only from the second quarter onwards, Nguyen Minh Trung, marketing director of the Ho Chi Minh City-based Vinh Tien Paper Joint Stock Company, said.

A recent devaluation of the dong by the State Bank of Vietnam and sky-high interest rates are to blame for the rising prices, according to Phan Minh Nghia, deputy CEO of Tan Mai Paper Joint Stock Company based in the southern province of Dong Nai.

Global prices of raw materials are also rising again, he added.

The firm is now selling printing and writing paper at VND23.1 million (US$1,116) per ton, an almost VND2.2 million increase since late last year, and newsprint at VND14.49 million per ton, a VND800,000 rise.

But the prices of paper imported from Indonesia and Malaysia remain at VND21.5 million-22 million.

N.C., a major paper importer based in HCMC, admitted it was partly due to unsold inventory from the third and fourth quarters of last year.

Trung said his company was notified of a price hike by domestic suppliers in mid-January, with the new prices being much higher than that of imports.

Last year consumption was around 2.4 million tons of paper, of which half was imported, according to the Vietnam Pulp and Paper Association.

However, even domestic manufacturers depend on imports for 50 percent of their raw materials, it said, meaning domestic prices are dependent on global prices.

The government has plans for growing more forests to produce pulp for the paper industry but most of its projects remain on paper, an analyst, who wished to remain unnamed, said.

Domestic producers using outdated technologies cannot compete with imports, an unnamed official from the VPPA said, adding local firms are now facing a challenge since Vietnam abolished import tariff on printing and writing paper from ASEAN member countries and cut the tax on newsprint to 3 percent.

Tags: Vietnam paper industry, Vietnam paper prices