High electricity costs trigger price hikes among Vietnamese cement producers

Vietnam’s leading cement manufacturers, including Vicem Bim Son, Bút Son, The Vissai, Thành Thang Group, and Xuân Thành Cement, have announced price hikes starting from 20 October 2024, driven by rising production costs, particularly due to higher electricity prices.

The adjustment will see cement prices increase by VND50,000/t (US$1.97/t) across most producers, with The Vissai opting for a smaller rise of VND46,300/t. According to a Thành Thang Group representative, the hike follows a 4.8 per cent increase in electricity prices from 11 October, which has significantly impacted production costs. "Despite our efforts to reduce costs through efficiency measures like waste heat recovery, we haven’t been able to fully offset the impact of rising electricity costs," he said.

Electricity expenses now account for 14-15 per cent of production costs. In addition to electricity, fluctuating coal and packaging prices—exacerbated by global geopolitical conflicts—have further pressured cement producers.

The Vietnam National Cement Association (VNCA) acknowledged that price increases are necessary to ensure business stability, citing that cement has been sold below production cost for years. VNCA warned that the industry would struggle to survive without these adjustments as electricity accounts for 15-20 per cent of cement production costs.

In the first nine months of 2024, domestic cement consumption stagnated, while exports fell to 22.5Mt worth US$863m, down 4.3 per cent in volume and 15.1 per cent in value year-on-year.

As input costs continue to rise, further price adjustments from additional manufacturers are expected in the coming weeks.