Rising raw material, feedstock prices distress manufacturers

By Thi Ha, Anh Minh May 19, 2021 | 03:03 am PT

Workers pack eggs at Vinh Thanh Dat Food Corporation, HCMC. Photo courtesy of Vinh Thanh Dat Food Corporation.

The sharp rise in the prices of inputs used in the steel, wood processing and other sectors is exacerbating difficulties for companies in these pandemic times.

Companies making animal feed, which import 85 percent of inputs, have to pay 15-30 percent more for them this year, according to the Ministry of Industry and Trade.

Hoang, owner of a company in the southern Dong Nai Province, said in the last two months the prices of raw materials have been rising but he has to sell products at a fixed price to farmers and animal husbandry companies.

"Covid-19 has worsened our difficulties by causing sales to drop."

Truong Chi Thien, CEO of Vinh Thanh Dat Food Corporation, a company that supplies chicken and duck eggs to confectioners, said his farmer partners want to increase egg prices as animal feed prices have risen by 30 percent.

Le Xuan Huy, deputy general director of CP Livestock Joint Stock Company, which produces animal feed, farms livestock and processes food, said prices of imported raw materials such as corn, soybean and soybean cake have gone up by 15-40 percent, increasing his company's average cost to VND60,000 ($2.60) per kilogram of pork on the hoof, 50 percent higher than last year.

Steel giant Hoa Phat Group has been buying and stocking up on raw steel for fear prices might continue to soar.

Its spokesperson said: "We [Hoa Phat Group] are trying to buy enough raw materials for steel production until the end of this year. However, [that means facing] a risk of plunging raw material prices."

Iron ore price have doubled in the last six months, according to the Ministry of Industry and Trade.

Nguyen Chanh Phuong, deputy chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), said timber prices have risen by 15-20 percent this year, and wood processing firms also have to bear rising logistics costs.

Many businesses affected by the rising input prices have said they need to hike prices to prevent losses.

The General Statistics Office said authorities should consider cutting import duties and help reduce transport and warehousing costs to stabilize domestic production.