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Prices of Raw Materials for Ceramic Sanitary Ware in Vietnam Rise

Vietnam’s stock market has been the best in the world since 2020, doubling last year. In October 2021, Vietnam lifted the lockdown due to the epidemic and accelerated the resumption of work and production. In the first quarter of 2022, GDP increased by 5.03% year-on-year, and imports and exports continued to grow. In the first quarter, the foreign trade volume reached 176.35 billion US dollars, a year-on-year increase of 14.4%. Therefore, there is also a trend of domestic investment in Vietnam recently, and many people in the industry are talking about this.

Dinh Hoang Huy, chairman of the Vietnam Building Ceramics Association, pointed out that the production of building sanitary ceramics in Vietnam accounts for about 50-55% of the production capacity, but the inventory pressure on local enterprises is still huge. The inventory of ceramic tiles is as high as about 80 million square meters, and the inventory of other products is about 15-20%. The production of sanitary ware in Vietnam has increased by about 18-20% compared with the same period in 2021, reaching about 170,000-175,000 products, of which the production of toilets accounts for about 30-35%, and other high-quality products need to be improved. Product sluggish rate is high. In 2022, if the market cannot consume part of the inventory, there will be considerable pressure on the operating performance of Vietnamese enterprises.

Nguyen Trung Hieu, sales director of Vietnam’s Sao Do Tile Factory, said that since the beginning of 2022, raw material prices, especially energy prices such as coal, have risen very strongly and unpredictably, with no signs of stabilizing. Specifically, since March 8, the price of coal in Vietnam has risen from VND 4 million to more than VND 6 million per ton, which has a great impact on the production of local enterprises and will set a new price level. Production enterprises and distribution and other aspects cause pressure.

In order to cope with the sudden increase in production costs and reduce losses, starting from 2022, Vietnamese building ceramics companies will increase the minimum price of all products by more than 3%. However, due to the sluggish real estate market, building ceramic products is still sluggish, and the inventory is large. Some companies have an inventory capacity of 2.5 to 3 months. In order to control inventory, companies need to control production at an appropriate level, almost maintaining 70-75% of production capacity.

It is worth noting that the US Department of Commerce recently officially launched an anti-dumping investigation on bathroom cabinets and cabinets in Vietnam. On May 24, the chairman of Vietnam Timber and Forest Products Association (VIFOREST), Mr. Du Xuan Li, said in an interview with Legal Online: “If high taxes are imposed, factories exporting to the United States will face many difficulties, great harm, and even close down. This affects the entire wood and wood products industry, affects employment, and also affects the reputation of Vietnam’s wood industry in the international market.” The Trade Remedy Department of the Ministry of Industry and Trade of Vietnam said that an official notice has been issued to VIFOREST to warn domestic enterprises and exporters, Ask to understand the situation and prepare for the event.

According to the analysis of Tianfeng Futures, in the past month, India, Indonesia, Malaysia and other countries have issued measures to adjust import and export tariffs and policies. The main reason is that a large number of overseas countries have seen obvious price rises, and some countries such as Turkey, Argentina and other countries have even experienced serious inflation.

However, for export-oriented economies such as Vietnam, it is more difficult to fight imported inflation through their own efforts, and there is a high probability that some subsequent countries will produce more export-restrictive policies.

Dinh Hoang Huy also pointed out that in 2022, the epidemic situation in Vietnam will be under control, and the demand for production and consumption will increase, but the prices of raw materials and fuels around the world will rise, such as gasoline, coal and transportation costs. High-priced imported raw materials will affect production costs and product prices, thereby driving up consumer prices and causing inflationary pressures.

In addition, since Vietnam’s capital market is centered on the banking system, the credit market is relatively large, and the bond market is dominated by government bonds. According to Resolutions No. 11 (2022) and No. 43 (2022) of the National Assembly of Vietnam, the State Bank and commercial banks are required to give priority to credit for manufacturing business and tighten investment, and real estate transactions, and securities.

Keep in mind that the total amount of bonds issued by Vietnamese companies in 2021 has grown by 56%. Among them, real estate enterprises dominate. In the past three years, the annual interest rate of Vietnamese real estate company bonds has been 10.3-10.6%, the highest level in the market.

In the first quarter of this year, 39 new projects were approved in Vietnam’s commercial housing market, an increase of only 49% over the same period in 2021. Compared with the same period in 2021, the number of approved projects was only 41%. The benefits of building and sanitary ceramics enterprises in Vietnam mainly depend on real estate.

The US media CNBC reported on May 24 that since 2020, Vietnam’s stock market has been the best in the world, and it has doubled last year, but it has recently begun to fall sharply. As of May 23, Vietnam’s VN30 index has increased from 2022 The highs have fallen sharply by 23.1%, with the Vietnamese market experiencing its worst performance since March 2020 in the week of May 22 due to strong selling pressure. Experts from Vietnam’s VNDIRECT securities company said that under the current situation that Vietnam is stepping up its efforts to rectify the financial market, this downside risk will still dominate the market and become the first market to be hit since the Federal Reserve threw the financial nuclear bomb.

In a recent article published by Reuters, Reuters analyzed that with rising inflation in Vietnam, trade and investment demand for Vietnam has declined amid the global economic slowdown, coupled with factors such as climate change risks affecting economic recovery and the continued downward risk of financial conditions, and other factors. Vietnam’s economy could be at risk of going back 20 years.

It is worth mentioning that the heated towel rail market in Vietnam is gradually expanding, and the supply of matching raw materials is also increasing. This situation is due to the publicity and hot sales of the heated towel rail of the BATHVO brand in Vietnam, making more consumers know what bathroom products they want.


Exports of building sanitary ceramics in Vietnam in 2021:

In 2021, Vietnam’s building and sanitary ceramics exports will remain stable, with ceramic tiles reaching US$199.5 million, an increase of nearly 10% over 2020. The main markets are Taiwan ($31 million), Thailand ($27.4 million), South Korea ($23.8 million), the Philippines ($19.7 million), and Japan ($12.8 million)…

The export of sanitary ware reached 209.9 million US dollars, mainly to Japan (about 52 million US dollars), mainland China (35.9 million US dollars), and the United States (40.7 million US dollars).

Vietnam’s ceramic frit production has now reached more than 300,000 tons/year. Exports in 2020 will be US$32.5 million, which will increase to US$42.3 million in 2021, an increase of more than 30%. The main markets are, the USA, Belgium, China, Italy, and Indonesia…

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