Special oil forces up glass, steel prices

Domestic glass and steel producers have warned that the increase in the price of mazut oil will raise production costs, forcing them to put prices up.

The Viet Nam National Petroleum Corporation (Petrolimex) decided to raise the price of mazut oil, a key fuel in glass and steel production, by VND400 per kilogram beginning on Monday.

The new price for mazut oil increased to VND13,200 per kilo gram for mazut 3S and VND13,000 for mazut 3.5S.

Deputy general director of Petrolimex Vuong Thai Dung said the world mazut price had remained consistently high since last month, leading to a VND600 per kilogram loss for Petrolimex. Therefore, the VND400 per kilogram price increase was still not enough to ensure company profits.

Vuong Dinh Dung, director of the Military Petroleum Corporation (MPC) , said that the company had not raised it prices for mazut oil yet but would be forced to as soon as it begins selling product imported at the new price.

“The mazut price increase will make the production cost for each tonne of steel increase by VND 20,000 at least,” said Pham Chi Cuong, chairman of the Viet Nam Steel Association.

To produce 1 tonne of steel, 50 kilograms of mazut oil are needed. He warned that transport costs will also increase as a result of the mazut price increase, as a large proportion of steel products are carried by ships and vehicles which run on this type of oil.

The price of construction steel surged 10 per cent compared with last month to VND12 million per tonne and is likely to increase further due to both the increased mazut oil price and the electricity price increase expected to begin on March 1.

Glass producers are experiencing a similar problem.

Tran Quoc Thai, chairman of the Viet Nam Glass Association (Vieglass), said construction glass producers were forced to raise prices because mazut accounts for 40 per cent of the production cost for glass products.

If domestic producers have to raise prices, they will face more difficulties, especially because illegally imported glass products are very cheap, selling for 30-40 per cent less than domestic products. However, domestic glass producers have called on the Government to apply safeguard measures against imported glass products, to reduce the value-added tax (VAT) and to lower mazut prices.

According to the glass association, the price for mazut oil price in Viet Nam’s market is currently 20-30 per cent higher than the price in regional countries.

VietNamNet/VNS

Tags: Vietnam glass, Vietnam steel industry