The increase in electricity prices is not a surprise to manufacturing enterprises. To cope with the increase in electricity prices, most enterprises have implemented solutions at many stages of production to minimize energy costs.
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| Enterprises producing iron, steel, cement... find solutions to adapt to rising electricity prices |
No surprise
The Ministry of Industry and Trade has just adjusted the average retail electricity price up by 4.8%. The increase in electricity price - one of the important input costs of manufacturing industries, has more or less affected a number of industries, especially those that consume a lot of electricity such as cement, chemicals, iron and steel, etc.
Previously, in 2023, electricity prices were adjusted twice: the first time on May 4, with an increase of 3%; the second time on November 9, with an increase of 4.5%.
Electricity costs account for a high proportion of total production costs in some industries, such as 9-10% for steel, 14-15% for cement, 9% for chemicals..., which will immediately increase the monthly costs of businesses.
The leader of Vicem Tam Diep Cement Joint Stock Company said: “The 4.8% increase in electricity price will increase the company’s expenses by 3 billion VND from now until the end of the year. If calculated for the whole year, this figure is equivalent to 13-15 billion VND.”
However, the increase in electricity prices is not surprising to businesses. According to Mr. Ha Quang Hien, Chief of Office of Vietnam Cement Corporation (Vicem), the increase in electricity prices is within the expectations of businesses in the industry. This is inevitable in the context of the electricity industry facing difficulties due to high input production costs such as coal and oil.
"Vicem's production and business plans always include provisions for electricity price increases," said Mr. Hien.
Increasing electricity prices force all production units to recalculate processes, promote savings, use electricity effectively, and minimize input costs.
The Vietnam Cement Association (VNCA) said that the cement industry consumes about 9.5 billion kWh of electricity each year. “We agree that electricity prices should increase according to market prices, but we request that Vietnam Electricity (EVN) provide stable and uninterrupted electricity supply to cement factories, because if the kilns have to stop, businesses will suffer huge losses,” Mr. Luong Duc Long, General Secretary of VNCA, proposed.
According to some cement enterprises in Ha Nam, the unstable electricity situation has been happening recently, greatly affecting the production plans of enterprises.
Consider increasing product prices
Input costs are increasing, causing difficulties for manufacturing enterprises. Pressure to adjust product prices is being placed on many industries, especially at this time when it is the peak time to prepare raw materials for production to serve the year-end market.
Cement, chemicals, steel and paper are the industries that will be hit hard by rising electricity costs. According to Vicem Tam Diep, the company is considering adjusting its selling prices.
Remember, in 2023, although electricity prices increased twice, domestic cement prices did not increase, but businesses chose solutions to promote technological innovation and optimize production costs.
Mr. Luong Duc Long, General Secretary of VNCA, predicted: “Manufacturers will have to consider increasing cement prices, because for the past few years, cement has been sold below production cost. If the selling price is not adjusted to partially offset input costs, businesses will not be able to survive.”
It is forecasted that the price of each ton of cement will likely be adjusted by manufacturers to increase by 50,000 VND in the near future.
To adapt to the increase in production input costs, including electricity prices, Vicem Tam Diep continues to apply power generation technology by utilizing waste heat from cement production lines to self-supply part of the consumed electricity; apply waste co-processing technology in kilns as alternative fuel. The goal is to reach the finish line with this year's business plan no matter what.
For consumer goods manufacturing enterprises, despite the pressure of increasing input costs, increasing product prices still needs to be considered, because purchasing power in the market is currently quite weak, increasing selling prices at this time will result in reduced consumption.
The Institute for Economic and Policy Research (University of Economics - Vietnam National University, Hanoi) calculated that the manufacturing industry, especially the production of fast-moving consumer goods, will be significantly affected in terms of costs when electricity prices increase in the last quarter of the year, leading to costs and selling prices being affected as well.
Electricity prices are expected to increase further in 2025. The price increase is inevitable, because the electricity industry is suffering losses because the electricity price has not yet covered the production cost. When electricity prices increase, businesses in all manufacturing sectors must continue to restructure costs, optimize production lines to save money, accelerate the transition to renewable energy to reduce dependence on traditional energy sources, and improve product competitiveness.
Source: https://baodautu.vn/doanh-nghiep-thich-ung-voi-gia-dien-tang-d227917.html
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