Enterprises bump up prices on rising raw material costs

Wednesday, May 05, 2021 11:11

Cement producers in Viet Nam are raising prices by VND30,000-40,000 (US$1.31-1.74) per tonne as costs surge. — Photo

With raw materials prices rising, enterprises are hiking prices to protect their profit margins.

Cement producers have increased prices by VND30,000-40,000 (US$1.31-1.74), according to Luong Duc Long, vice president and general secretary of the Viet Nam Cement Association.

Sai Gon Food Joint Stock Company hiked prices by 5-15 per cent in the first and second quarters, and the rise in the third and fourth quarters might reach 25 per cent, its representative said.

Nguyen Quoc Anh, director of Duc Minh Rubber Company Limited and chairman of the HCM City Rubber and Plastic Association, said rubber prices are up 60 per cent, and enterprises are planning to hike product prices by 5-10 per cent, but if the cost rises continue in the next two months, 25-30 per cent hikes are likely.

“None of our orders in the first quarter was profitable. It is difficult to get foreign partners to agree to price hikes; they usually ask for further monitoring and renegotiation.”

Binh Minh Plastic Joint Stock Company saw after-tax profit drop by 18 per cent in the first quarter as raw material prices rose.

Plastic powder prices soared 25 per cent year-on-year to $1,085 per tonne in the first two months of the year, Rong Viet Securities Joint Stock Company reported.

With domestic supply only meeting 25-30 per cent of demand, the dependence on imported raw materials has lasted decades, according to Tran Viet Anh, vice chairman of the HCM City Association of Enterprises and general director of the Nam Thai Son Import - Export Joint Stock Company.

Many enterprises are working to cut costs and renegotiate contracts.

Some are hesitant about finalising prices for next year’s orders.

"Production cannot be interrupted, and enterprises must thus make use of all raw materials in stock while waiting for further developments," Anh added.

The major increase in prices is merely due to a cyclical upturn in the commodity market, Deputy Minister of Industry and Trade Do Thang Hai said.

Nguyen Duc Thanh, general director of Tan An Foods Processing Export Company Limited, encouraged enterprises to look at the bright side, namely abundant export orders.

According to the latest survey from IHS Markit, Viet Nam’s industrial output growth was at a 20-month high, with a sharp rise in new orders and export sales leading to stronger rises in employment and buying activity.

The Vietnam Manufacturing Purchasing Managers Index increased to 53.6 in March from 51.6 a month earlier, the fourth straight month of expansion in manufacturing sector and the strongest pace since December 2018.

Difficulties in sourcing raw materials persisted, with suppliers' delivery times continuing to lengthen. But vendor performance fell the least in four months, and firms were able to expand their stocks.

Price data showed input cost inflation accelerated to an over three-year high amid higher steel prices and increased costs of items sourced from China.

Output prices rose at the sharpest pace in over four years. — VNS

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