Posted on 23 Jun 2008
In the south, several steel producers have raised steel prices
by VND200-300,000/tonne. Vina Kyoei’s rolled steel is now selling at
VND16.35-16.55mil/tonne, while steel bars at VND16.57mil. Pomina is selling
rolled steel at VND16.42mil/tonne and steel bars at VND16.70mil/tonne.
Other still mills have not raised sale prices yet, but have
expressed their concern about the sharp increases of ingot steel. Now foreign
suppliers are offering ingot steel at $1,180/tonne. Moreover, the VND’s sharp
decrease in value, which makes ingot steel imports more expensive, has also
bolstered the difficulties for steel producers.
Nguyen Tien Nghi, Deputy Chairman of the Vietnam Steel
Association, said that steel mills are losing money with the current sale
prices, which were calculated based on ingot steel prices at below $1,000/tonne.
As such, the money producers get from selling finished steel
is not enough for them to import ingot. If steel mills do not import any more
ingot steel they will not have enough material for steel production. The
inventory stocks of ingot steel will be enough for production in Q3, which
means that ingot steel will be lacking in Q4.
While local steel producers have to import ingot steel at
high prices, local ingot steel producers still have to export their products.
The ingot steel producers said that their products are cheaper than the
imports, but local steel mills are not purchasing them.
Ingot steel producers say that they are now exporting ingot
steel at over $1,000/tonne, which can bring them profit.
According to the Ministry of Industry and Trade (MOIT),
100,000 tonnes of ingot steel have been exported to
Sources say that enterprises have signed contracts to export
over 120,000 tonnes of ingot steel.
According to the General Statistics Office, 1.778mil tonnes
of ingot steel were imported in the first five months of the year, worth
$1.248bil, up by 23,6% over the same period of last year. This proves to be a
big volume if noting that the steel consumption is not high in the rainy
season. It is estimated that 260,000 tonnes of steel will be consumed in June
2008.
MOIT may propose that the government raise the tax rate on
ingot steel exports to 10% from 2% in order to limit ingot steel exports.
However, the ministry has not made a decision about that as it thinks that the
situation is still controllable.
The import scrap steel price has also increased. A scrap steel importer said that it is selling scrap steel to Vietnamese steel mills at $660/tonne.
