Raw material price rises prove damaging

HA NOI (VNS)— The price of many raw materials used in industry has increased recently, creating huge difficulties for enterprises.

According to President of the Viet Nam Steel Association Pham Chi Cuong, the rising costs of iron ore, scrap steel and steel billets had damaged domestic production.

Prices of steel imported from Korea, Russia and Malaysia have soared by US$30 per tonne to an average of $620, meaning domestic steel price has also been increased by as much as VND200,000 per tonne. The association estimated the amount of steel sold last month decreased 38 per cent over the previous month.

They say that prices increased in spite of low domestic demand due to China's decision to stock up on their steel reserves.

In the field of paper production, raw materials in the industry's domestic market are becoming rare and their prices recently increased by 40-50 per cent.

According to a representative from the Viet Nam Packaging Association, with the current prices of raw material, enterprises made a loss of about VND1.1 million per tonne of paper in comparison with three months ago.

He added that the short-term solution would be to increase imports of raw materials to deal with the scarcity.

Pham Thi Thuy Nga, director of a packaging company, told the Sai Gon Giai Phong (Liberated Sai Gon) that the company was forced to increase prices, but at a rate equal to only one quarter of the increasing rate of raw material prices, while enhancing savings to reduce losses.

A director of a mechanics factory in HCM City's Binh Tan District said that many raw material providers planned to reduce production meaning it would be difficult to find stable supply sources of raw materials with reasonable prices. — VNS