Enterprises bump up prices on rising raw material costs hinh anh 1Illustrative image (Photo: VNA)
HCM City (VNS/VNA) - With raw materials prices rising, enterprises are hiking prices to protect their profit margins.

Cement producers have increased prices by 30,000-40,000 VND (1.31-1.74 USD), according to Luong Duc Long, vice president and general secretary of the Vietnam Cement Association.

The Sai Gon Food Joint Stock Company hiked prices by 5-15 percent in the first and second quarters, and the rise in the third and fourth quarters might reach 25 percent, its representative said.

Nguyen Quoc Anh, director of the Duc Minh Rubber Company Limited and chairman of the HCM City Rubber and Plastic Association, said rubber prices are up 60 percent, and enterprises are planning to hike product prices by 5-10 percent, but if the cost rises continue in the next two months, 25-30 percent hikes are likely.

“None of our orders in the first quarter was profitable. It is difficult to get foreign partners to agree to price hikes; they usually ask for further monitoring and renegotiation.”

The Binh Minh Plastic Joint Stock Company saw after-tax profit drop by 18 percent in the first quarter as raw material prices rose.

Plastic powder prices soared 25 percent year-on-year to 1,085 USD per tonne in the first two months of the year, the Rong Viet Securities Joint Stock Company reported.

With domestic supply only meeting 25-30 percent of demand, the dependence on imported raw materials has lasted decades, according to Tran Viet Anh, vice chairman of the HCM City Association of Enterprises and general director of the Nam Thai Son Import - Export Joint Stock Company.

Many enterprises are working to cut costs and renegotiate contracts.

Some are hesitant about finalising prices for next year’s orders.

"Production cannot be interrupted, and enterprises must thus make use of all raw materials in stock while waiting for further developments," Anh added.

The major increase in prices is merely due to a cyclical upturn in the commodity market, Deputy Minister of Industry and Trade Do Thang Hai said.

Nguyen Duc Thanh, general director of the Tan An Foods Processing Export Company Limited, encouraged enterprises to look at the bright side, namely abundant export orders.

According to the latest survey from IHS Markit, Vietnam’s industrial output growth was at a 20-month high, with a sharp rise in new orders and export sales leading to stronger rises in employment and buying activity.

The Vietnam Manufacturing Purchasing Managers Index increased to 53.6 in March from 51.6 a month earlier, the fourth straight month of expansion in manufacturing sector and the strongest pace since December 2018.

Difficulties in sourcing raw materials persisted, with suppliers' delivery times continuing to lengthen. But vendor performance fell the least in four months, and firms were able to expand their stocks.

Price data showed input cost inflation accelerated to an over three-year high amid higher steel prices and increased costs of items sourced from China.

Output prices rose at the sharpest pace in over four years./.