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Vietnam’s cement prices pushed up by energy costs

World Cement,

Cement producers in Vietnam have announced plans to increase the price of cement by VND40 000 – 50 000 per ton as a result of rising energy prices. Vietnam operates 97 production lines with a total capacity of 57.4 million t; a further 13 new lines are scheduled for operation over 2010, adding 11.7 million t to the present capacity.

Nguyen Van Thien, chairman of the Vietnam Cement Association, remarked how higher energy prices have driven production costs up by 2 – 3%. “Cement companies have to pay an extra cost of VND 40 000 – 50 000 for each ton of cement produced, or 2 - 3%, therefore they are considering to raise the selling price.” The Ministry of Industry and Trade has confirmed this prediction by forecasting that cement prices will “slightly rise” in March.

Recent trends
This is not the first time cement producers have put up their prices in recent months. Hoang Thach Cement Co. implemented an increase of VND40 000 earlier this year due to a noticeable reduction in its profits; Bim Son Cement Co. is looking to do the same by adding some VND100 000 per ton to its current price over the coming year. Other producers within the nation have raised their prices by VND19 000 – 60 000 per ton.

Mai Anh Tai, general director of Thang Long Cement Company, pointed out that power constitutes some 7% of the total production cost of cement. Producing 1 t of cement requires approximately 44 kWh of power; “in the short term, the increase of power prices by 6.8% will considerably reduce the benefits of cement enterprises,” he noted.

Paying the price
The price of coal rose 30% over September – December last year and while cement producers kept their prices the same, profits suffered as a consequence. With power prices rising 6.8% and VAT doubling, the knock-on effect for cement prices is inevitable.

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