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Input material prices down, hope for the national economy
Double the good news has been announced: just a few days after the national economy welcomed the news about the petrol price decrease by VND1,000/litre, it heard about the decreases of input material prices.
The input material price decreases prove to be sweet news for producers, who have been weeping about overly high production costs and heavy losses recently.
Opportunities for farm produce
The prices of urea are now tending to decrease as a result of the sharp decrease of the world’s oil price. Vietnamese importers are not making deals at this moment as they expect prices to go down further.
Foreign exporters on August 21 offered urea in the Baltic market at $700-705/tonne FOB, a decrease of $80-90/tonne compared to the end of July. Meanwhile, the offered price in the Yuzhnyy market was $750-760/tonne, down by $60-70/tonne. The price of DAP has also witnessed sharp decreases over the end of July, offered at $1,172.5/tonne FOB on August 21 in the Nola market, a decrease of $37.5/tonne.
Domestic prices have also been decreasing to follow the price decreases in the world’s market. Fertiliser prices in the Mekong River Delta have been sliding sharply thanks to profuse supplies. DAP has seen its prices decrease by VND3,600-4,000/kg to VND18-20,000/kg (retail prices) and VND16,500-17,000/kg (wholesale), while the prices of urea, NPK, kali and phosphate all have decreased by VND400-1,200/kg compared to last month. Now is a good time for enterprises to store up products for agricultural production.
According to the Food and Agriculture Organisation (FAO), rice output in 2008 may reach 668mil tonnes, or 1mil more than the previously forecast level. Though rice prices have dropped by $50-150/tonne over last month, not many transactions in Asian markets have been reported as importers hope that prices will go down further when supplies become more profuse as big rice importers harvest their crops.
However, experts have predicted that rice prices will not fall down sharply in the time to come despite the profuse supplies, since the demand is rising in Japan, the Philippines, Iran and Iraq.
Input material prices going down
According to the Taskforce on Domestic Market Regulation, the light sweet oil price slid in the last days of August. Contracts with deliveries in September 2008 were signed at $111.34/barrel. Meanwhile, the gold price has dropped to $772.98/oz, urea price has dropped by $80-90/tonne to $700/tonne, and ingot steel to $950/tonne. The prices of some other products that are input materials for industries like copper, lead, zinc, coffee and rubber have also been decreasing considerably.
Though the prices of many kinds of input materials remain high due to volatile crude oil prices, experts still believe that input material prices will go down slightly more in September, which is good news for many Vietnamese industries.
Ingot steel and finished steel prices are coming down from high levels in July. In Southeast Asia, scrap steel is going for $550-600/tonne, a decrease of $100-150/tonne, while ingot steel is being offered at $950-960/tonne CFR, down by $250/tonne.
In the domestic market, a lot of steel producers have had to slash sale prices in order to boost sales, which has led to construction steel prices decreasing by VND200,000-3mil/tonne compared to July.
Currently, steel prices in the north are hovering around VND16.85-17.5mil/tonne, and VND17.23-17.6mil/tonne in the south.
The pulp price in the world’s market is also on the decrease in comparison with July. The price of NBSK pulp, for example, has decreased to $887.17/tonne in Europe, down by $7.79/tonne. In the US, NBSK is selling at $886.49/tonne, down by $5.83/tonne. Experts have predicted that the prices of paper products will decrease and remain stable in September.
VNN
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