Rising price of raw materials may push up retail prices

The product most affected would be canned food, primarily because the rising cost of steel is pushing up the price of tin plate, which is the raw material for producing cans.

Payungsak Chatsutipol, chairman of the Thailand Iron and Steel Industry Club under the Federation of Thai Industries (FTI), said the cost of tin plate had risen by 30 per cent or by Bt4,000 to Bt5,000 a tonne since early last year due to the limited supply of raw materials in the world market.

Thai can producers are facing higher rawmaterial costs because the country lacks a downstream steel industry, Payungsak said.

A Commerce Ministry source said the Internal Trade Department had already approved increasing tin plate prices to Bt4,270 a tonne since the end of last month, and this might push up the retail price of tinned food.

However, the ministry's permanentsecretary, Yanyong Phuangrach, said manufacturers might not immediately pass on burden to consumers because the market was still very competitive. Besides, consumers had several other alternatives to canned food.

 Paiboon Ponsuwanna, chairman of the FTI's Food Processing Industry Club, said Thai food manufacturers have been suffering from high production costs, because raw materials, particularly tin and sugar, have been increasing.

However, there are no plans to increase retail prices as it would affect competitiveness in the export market, he said. Industry leaders are meeting next week to come up ways of managing the situation, Paiboon said.

According to the department, the price of import crude palm oil rose from Bt24,200 a tonne in the first two weeks of January to Bt25,100 in the second half of January. During the same period, the price of steel rod rose to US$500 (Bt16,600) from $490 a tonne.

However, not all raw materials are becoming more expensive, and some are even becoming cheaper like soybean, which fell to $370 from $374 a tonne, and Urea fertiliser down to $325 from $331 a tonne.