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High price of construction material hurts consumption
  • | vneconomy, | March 08, 2011 03:19 PM

>> Vietnam\'s construction material production expected to show 30% rise

The construction materials market in Vietnam is moving at a slow rate, as price hikes decimate purchasing power.

From March 1, steel firms have raised prices by between VND300,000 and VND500,000 per tonne.

The price of tile has recently increased by between VND10,000 (USD0.47) and VND15,000 (USD0.71) per square metre, said Ms Bang, owner of a construction material shop at Hoang Quoc Viet Street, Hanoi.

Bricks are up by VND100 each, and sand by VND50,000 (USD2.39) per truckload, she said, adding that their inventory of these materials is not moving do to the price increases.

Le Van Toi, head of the Ministry of Construction’s Department of Building Materials explained that the recent increases in the prices of petroleum and electricity, which are essential to the national economy, are responsible for rises of construction materials.

Toi, however, advised producers of such materials to apply new technologies that can help save energy in order to lower production costs and selling prices.

It’s a similar situation with cement and other construction materials. High prices mean lower demand. Vietnam consumed only 6.2 million tonnes of cement in the first two months of this year, said Nguyen Van Diep, from Vietnam National Cement Association. The figure is 800,000 tonnes lower than the same period last year, Diep noted.

He said that some cement firms had increased prices by VND60,000 (USD2.87) per tonne. This has brought selling prices to between VND900,000 and VND1.36 million (USD43.13-USD61.18) per tonne, depending on the type. The price hike has definitely affected sales, he elaborated.

“In fact, the national cement consumption should be around eight million tonnes between January and February in order to meet up with the forecast consumption of between 55 million and 56 million tonnes for this year,” Diep attributed.

Cement prices will probably continue to increase as long as the price of coal, which is used in cement production, goes up, he said.

In the meantime, Nguyen Van Kien, Chairman of Board of Directors for X18 Cement JSC, said the current lack of purchase power may prevent small-sized firms, which have annual capacities of around 100,000 tonnes, from raising prices. They may be forced to just take the losses.

Purchase power for glass has also gone down after the recent price hikes, said Tran Quang Thai, chairman of Vietnam Glass Association.

From March 1, steel firms have raised prices by between VND300,000 and VND500,000 (USD14.37-USD23.96) per tonne. This has brought ex-works prices to VND17 million (USD814.76) per tonne in the northern region, and to between VND18 million and VND18.5 million (USD862.68-USD886.65) per tonne in the southern region. Consumers, meanwhile, have to buy steel at nearly VND20 million (USD598.54) per tonne.

The country’s steel consumption in February reached 400,000 tonnes, down by 69,000 tonnes compared to a month earlier, said Nguyen Tien Nghi, Vice Chairman of the Vietnam Steel Association (VSA).

He, meanwhile, forecast that demand for steel will remain high this month [March] for fears that prices may increase more in the future.

Steel consumptions still high

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