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Big coal consumers complain about higher prices
Fertiliser, cement and paper producers, the three biggest coal consumers, have complained coal price increase will badly affect production.
The Ministries of Finance (MOF) and Industry and Trade (MOIT) have rubber stamped the proposal by the Vietnam Coal and Mineral Industries Group (Vinacomin) to increase the coal sale price by 25-30 percent.
The “rock coal” price has been raised by 30 percent for nitrogenous fertilizer producers and by 25 percent for phosphate producers. Meanwhile, the price of dust coal for cement and paper producers has risen by 25 percent.
In fact, the price increase is seen as a first step in a plan to increase coal prices to a point where domestic prices are just 10 percent lower than the export price. This means a further price rise can be expected in the fourth quarter of the year.
Electricity production is the only sector which still can enjoy the preferential coal price, which is 38 percent lower than the coal production cost.
However, fertilizer, cement and paper producers still complain that the price increase has been decided at a ‘very sensitive moment’, when the national economy still has not escaped the down turn.
Manufacturers have said that the higher coal price will force them to pay more for input materials, while they will not be able to raise the sale prices of their finished products for fear that the sale price increase will keep customers away.
The prices of fertilizer products tend to decrease due to the profuse supply. In northern provinces and Mekong Delta, people are harvesting the summer-autumn crop. Meanwhile it will take people in the central region and central highlands more time to resume production after continued storms and floods. This means that the fertilizer demand will not be high.
Hoang Manh Tien, a Senior Executive of the Vietnam Chemical Corporation (Vinachem), said that the coal price hike will make Vinachem suffer.
Tien said Vinachem’s fertilizer production companies still have big stocks (roughly 600,000 tonnes) but they are unsalable due to their high production costs. It’s a result of the materials for fertilizer production being imported at a time when world prices were high and due to current low demand. As such, the coal price hike will only make the situation worse.
The price hike has also caused headaches for paper producers. Vu Ngoc Bao, secretary general of the Vietnam Paper and Pulp Association (VPPA) said 25-30 percent is really too big an increase, which may make paper production stagnant.
Meanwhile, Le Van Chung, General Director of the Vietnam Cement Corporation, said that the cost rise will make cement production costs increase by 23,000 dong per tonne.
vietnamnet, vneconomy
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