Paper fever anticipated

16:06' 22/04/2008 (GMT+7)
VietNamNet Bridge – The paper market has been witnessing the fever attack for the last several months: the prices have been skyrocketing, while the supply has fallen short.
After the paper price increase in March, the paper prices have increased by VND400,000/tonne. Some newspaper offices in the North even once considered reducing the circulation due to the paper price increase.
In January 2008, the price of printing paper and writing paper (70g/m2) were at VND15.1mil/tonne. However, the price later skyrocketed twice to VND17mil/tonne, the record high in the paper history.
Cartridge papers have also risen by 10% over the beginning of 2008, now selling at VND17.3mil/tonne. Van Duc Hieu, Business Director of An Binh Paper Joint Stock Company, said that since October 2007, cartridge papers have witnessed six price increases.
The price fever has not only been occurring with finished paper products, but with waste paper as well, including both imports and locally collected waste. In January 2007, one ton of waste paper cost VND2mil only, while producers now have to pay VND3.5mil (+75%) to buy one ton of scrap paper.
Meanwhile, it is not easy to buy paper at this moment as the supply has been falling short. The director of a paper plant said that enterprises all have to queue to purchase paper. It is because of the short supply of materials, both from domestic sources and imports from ASEAN countries.
Ten days ago, leaders of newspapers were warned about the shortage of newsprint if the situation would not be improved. Newspaper offices all said that they have never seen such a serious shortage, adding that they have to consider reducing the circulation and the numbers of pages for advertisements.
Vu Van Binh, Deputy Editor-in-Chief of Tuoi tre Newspaper, complained that since the beginning of the year, the paper prices have increased three times by 12.9%, or VND1.32mil/tonne.
Students are the biggest sufferers from the paper price increases. According to Nguyen Minh Trung, Marketing Director of Vinh Tien Paper Joint Stock Company, as the material prices increase, the company has twice raised the sale prices in early March and mid April with the increase of VND150/notebook (+9%).
Vinh Tien and other workshops are entering the high production season for the new academic year, to begin in early May.
Trung said that paper makers have been pushed into a dilemma. If they raise the sale prices, the sale volume may decrease as enterprises are fiercely competing with each other. If they do not raise the sale prices, they would suffer heavy losses.
However, analysts all have forecast that the price of notebooks will increase by 5% at least in the time to come.
Trung said that paper makers have been informed by material suppliers that the material prices would keep increasing in the time to come.
Analysts said that Vietnam has been relying on import materials. As for newsprint, in 2007, Vietnam needed 110,000 tonnes in total, but only 45,000 tonnes were provided locally byTan Mai Paper Company, while the remaining volume must be fed by imports.
Though the investments in the paper industry increased sharply recently with a lot of big projects, the total paper output is expected to reach 2.5mil tons only, or 1.2-1.3mil tons higher than currently.
An official from the Vietnam Paper Corporation said that Vietnam-made products prove to be less competitive compared to import products due to the backward technologies and equipments. As for packing paper, though the import products are $25-30/tonne higher than locally made products on average ($460/tonne), local. That explains why the local enterprises that make these types of paper, are running at 60-70% of the designed capacity only.
The deputy General Director of An Binh Paper Company said that if Vietnamese enterprises maintain the current backward technologies and small investments, they will completely lose the domestic market.