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Unusual price trends shape Vietnam market   2010-07-21 - Nguoi lao dong

Analysts have warned that the domestic prices of some products have been performing abnormally. While input material prices have decreased sharply, prices of finished products have increased.

After a period of decline, structural steel prices have increased again since the beginning of July. Domestic steel manufacturers, reasoning big losses, have raised prices by 600,000-700,000 dong/ton to 13.4-13.5 million dong, while the retail price now stands at 14 million dong. Some steel manufacturers have even claimed that they need to raise prices by another one million dong/ ton.


Prices of finished steel products have been rising, but steel ingot prices have been dropping. According to Nguyen Tien Nghi, Deputy Chair of Vietnam Steel Association, in June, the world steel ingot price dropped by nearly $100/ton to $500. With such a price, steel mills just need to sell at a little over 12 million dong/ton to profit.



World milk materials prices have dropped sharply by $300-400/ton from the previous month to $2,900-3,500 (skimmed milk powder). Meanwhile, full cream milk prices have reduced by $100/ton in Europe to $3,400-3,600. Still, domestic dairy prices remain sky high.


In July, the steel ingot moved up, but very slightly. Chinese steel ingot has dropped further to $485-490/ton due to large stockpiles in the country. China’s policy on removing tax refunds on some kinds of steel products has urged Chinese producers to export products in large quantities and enjoy the tax refund before the policy takes effect. This has also made the steel prices decline.


Analysts believe that to halt price decreases, steel manufacturers tried to cooperate to push prices up. The move made demand climb again in May and June, because businesses worried that prices would go up further and rushed to buy steel.  


Economic analysts warned that steel price increases would be a golden opportunity for foreign steel to flow into Vietnam. The country has imported 222,000 tons of finished products so far in 2010.


While the world sugar price has been decreasing, the domestic price has risen.


Market analysts noted that the world sugar price dropped to $520/tone, a decrease of 27 percent in comparison with the first months of 2010. Therefore, the sugar import price sits at 12,000 or 13,000 dong per kilo after taxes and expenses. The retail price has climbed to 20,000 dong per kilo.


The sugar price has not risen in response to a shortage. According to Vietnam Sugar and Sugar Cane Association, stockpiles are very big, resting at about 329,000 tons, while Vietnam only consumes some 60-70,000 tons per month.


The association’s Secretary General Ha Huu Phai remarked that the Ministries of Industry and Trade and Agriculture and Rural Development have allowed 150,000 tons of sugar imports.


To explain why the domestic price keeps rising while the world price declines, market analysts point out that speculators are trying to force prices up because the mid-autumn festival season is coming.

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