Cement price differentiation: VND40,000 a bag

Despite fluctuations in the soaring prices of building material such as steel, iron, cement and bricks in the wake of New Year, Ho Chi Minh City continues to face scarcities and price hikes for building material in May.

On May 8-9, the cement price on the retail market skyrocketed to VND85,000/ bag and in some cases to VND100,000/bag. Even those win money found it difficult to buy cement.

Although cement producers such as Ha Tien 1 and Holcim still ensure cement supply at VND53,000/ 50-kg bag since early February, a cement price fever has hit the retail market while 80 percent of building material shops in Ho Chi Minh City said that cement has been sold out.

A number of shops which still store cement, offered prices ranging from VND85,000-VND100,000/ bag, up VND30,000-45,000/bag or 70 percent more than the prices at plants. Customers, investors and contractors have to incur the disparity in prices while profits fall into the hands of distributors. Worthy of note is that even though a bag of cement is priced at VND90-100,000 in the face of insufficient supplies, sellers pay no attention to buyers.

Projects in limbo

Not only small cement buyers but also investors, contractors and construction companies are now in difficult position to cope with the cement price fever while a host of large-scale transport and drainage projects are underway in Ho Chi Minh City with the aim of reducing traffic congestion and waterloging. However, with the current shortage of cement, steel and iron, the slow implementation of projects is inevitable.

Ngo Quang Vinh, director of the Thu Thiem bridge and road project said that to execute the second phase of the project, the contractor needs around 7,000 tonnes of steel and 25,000 cu.m of concrete. The project uses around 250 tonnes of cement every day but due to scarcities, the contractor only gets around 50-70 tonnes, despite signing purchasing contracts with cement plants.

Talking about the progress of the Nguyen Van Cu bridge and road project, Nguyen Ngoc Ngu affirmed that it is difficult to open the bridge to the public by the end of this December as planned.

Some investors said that in the near future, prices of construction materials will continue to rise. At that time a series of projects might stop and contractors may flee.

What reasons?

Cement material suppliers said that the Hoang Thach Cement Company buys input materials at prices which are higher, even double the prices on the market. Although they offer materials at cheaper prices, they cannot compete with other suppliers selected by the company.

Dao Ngoc Binh, director of the Hoang Thach Cement Company said that the company plans to buy around 400,000 tonnes of silicon stone at prices of VND67,900 – VND72,700 per tonne. Meanwhile, the Tuan Dung Ltd Company in Kinh Mon district, Hai Duong province offered VND35,000 per tonne of silicon stone. It means that input materials for cement production have increased by tens of billions of Vietnam Dong.

Furthermore, the development company No1 which is selling silicon stone to the Hoang Thach Company at price of VND67,000 and VND72,000 per tonne while it offers VND56,000 and VND61,000 per tonne on the market.

Economic experts said that this is one of the main reasons for a spike in cement prices. The mechanism easily causes monopoly for some companies.