S&P Global’s report shows that input prices, or raw materials used in the production process, continued to increase in March.
Some businesses said that the price of raw materials from aluminum and steel has increased by tens of percent since the end of last year. Businesses are proactively taking measures to limit the impact of this increase.
HBT Vietnam Precision Mechanical Joint Stock Company said that the price of aluminum bars used by the company to produce power transmission equipment has increased by 13% compared to the end of 2024, from 95,000 to 108,000 VND at present.
100% of the company’s raw materials are imported. Since the end of November last year, the company has received notice from its supplier about the increase in aluminum prices. The company has to choose between sacrificing profits or increasing selling prices.
Mr. Duong Ngoc Hanh – Director of HBT Vietnam Precision Mechanical Joint Stock Company said: “We have negotiated with customers because the source of raw materials has increased, so we also want to adjust the selling price to increase, but they have not responded yet.”
For many businesses investing in the high-tech sector , the lack of domestic raw material supply has caused them to lose their competitive advantage.
Mr. Phung Duy Phong – Technical Director of HB Tech Vina Company, Bac Ninh said: “Standard components for high-tech machinery production in our country are completely non-existent, 100% dependent on imports, so the cost of creating machines has increased by about 30 to 35%. Thus, businesses have lost their advantage compared to foreign businesses”.
In the short term, many businesses in the Vietnam Association of Supporting Industries (VASI) have joined hands to stabilize prices.
Mr. Le Minh Duc – Director of JK Vietnam Industrial Joint Stock Company said: “Some businesses have joined together to find a common source of purchase. Instead of buying 100 tons per month by myself, I can group 10 businesses together to buy 1,000 tons. That way, I have an advantage in negotiating prices rather than buying individually.”
Vietnam’s steel source is mainly imported. 2024 marked a record year for steel and steel products imports, with a turnover of more than 19 billion USD. To proactively supply, experts suggest that there should be policies to form domestic supply chains.
Mr. Nguyen Bich Lam – Former General Director of the General Statistics Office recommended: “We need to determine which products are key products and what the world’s demand is so that we can have policies to create and nurture those key products, gradually replacing external supplies.”
The Prime Minister has assigned the Ministry of Industry and Trade to research, develop, and propose to the Government to submit to the National Assembly the draft Law on Production of Key Industrial Products to be included in the 2025 Law and Ordinance Development Program, and report to the Government in the second quarter of this year. Determining production priorities will be the basis for us to tailor policies suitable for each industry and each field.