Rise in coal prices causes pressure on cement industry

By the end of March, many cement companies heard Vinacomin’s “oral statement” that coal would rise 40% in prices within this month, bringing coal 4A from 1.17 million dong per tone to 1.73 million dong per ton, the Lao Dong newspaper reported.

On March 31, Vietnam Cement Association confirmed the above information. Nguyen Van Thien, the association president said “Associates were noticed about the price increase.

Accordingly, Vinacomin’s coal suppliers required cement makers to sign extra contract appendix on a 40% rise in coal prices but this has not been written in official document”.

With the petrol prices up 33%, electricity +15.3% and coal +40%, cement price will jump by 10-15%. Currently, total cost for energy accounted for up to 45-50% of cement cost price, he added.

In addition, the dong and greenback forex rate rose 9.3% and loan rates were raised to 20% pa for which cement makers are facing many challenges and hardships, especially cement projects fall maturity. Cement price surges by 12-15% for higher loans at banks.

“Factors including electricity, petrol, dong/US dollar forex rate and higher bank loan rates are pushing cement price up 22-30% depending on size of each cement factory. If not adjusting prices to offset a part of costs attributed to price increases, cement industry cannot exist and afford to pay domestic and foreign investment debts”, Thien noted.

Since the end of 2010, Vinacomin submitted the Prime Minister a proposal of raising coal prices in 2010 for four big consumers of cement, fertilizer, paper and electricity. Under it, the scheme of selling coal to these consumers will be closer to market prices, equaling to coal export price. – Vietbiz24

Tags: Vietnam cement, Vietnam cement industry

Posted by VBN on Apr 4 2011. Filed under Cement. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry