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Power price hike hits steel, cement industries hard
With the power price hike of 6.8% starting next week, some economic experts and enterprises say some industrial sectors such as steel and cement will be hit hard.
The power price hike in early March will result in more difficulties for the production activities of some key industries such as steel and cement.
The power price hike in early March will result in more difficulties for the production activities of some key industries such as steel and cement.
Pham Chi Lan, an economic expert, asserted that the price hike would raise the production costs of some key industries, especially steel and cement production.
Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA), told the Daily Wednesday that some 600 kilowatt-hours of electricity is required to produce one ton of steel ingot, so if the power price surges by 6.8% it would cost an extra VND50,000 to produce a ton of ingot.
“In 2010, the steel industry targets production of 2.8 million tons of steel ingot for domestic demand, so the country’s ingot producers will pay another VND140 billion for electricity, which is a big burden for for them,” Cuong said.
He said that although the power cost for producing steel products was less than ingot production, makers of finished steel products would have to pay another VND60 billion for the targeted output of five million tons this year.
Cuong also said the association had just required its members to hasten the renovation of steel production technologies to reduce power costs and avoid a price hike of steel products in the market.
Do Van Thanh, General Director of Dinh Vu Steel Company in the northern city of Hai Phong, said electricity made up more than 10% of the total ingot production cost. So when the power price surges together with the price increase of many other materials, it will create more pressure on enterprises to balance their production activities.
Thanh told the Daily that his company planned to turn out some 220,000 tons of ingots this year. In case of higher power prices, he predicted the selling price of ingot in the domestic market could increase by 10% compared to the current price of VND10.2 million per ton.
He judged that in the period of the country’s economic recovery, the price increase would possibly reduce the consumption of ingot and steel products in the domestic market.
Though the cost of power in cement production is said to be less than in steel production, some cement producers also said the power price hike would badly impact the cement industry.
Mai Anh Tai, general director of Thang Long Cement Company in Hiep Phuoc Industrial Park in HCMC, said higher cost in cement production was inevitable because power makes up some 7% of the total production cost of cement.
He noted that to produce one ton of cement, some 44 kilowatt-hours of power is required. “So in the short term, the increase of power prices by 6.8% will considerably reduce the benefits of cement enterprises,” he added.
Talking to the Daily on Wednesday, Deputy Minister of Industry and Trade Do Huu Hao confirmed that the price hike was already approved by the Government with an average increase of 6.8%.
He said the ministry would look into impacts on the production of some economic sectors affected by the electricity price hike.
VietNamNet, SGT
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