Posted on 09 Jul 2008
The Vietnam Steel Association (VSA) has officially asked the
Ministry of Industry and Trade to allow its members to raise steel prices.
"Steel price increases prove to be indispensable as ingot steel prices are
skyrocketing," it says in the document it sent to the ministry.
In fact, some southern steel producers have raised their
sale prices already. Pomina, for example, has raised the sale price from 16.426
million dong/tonne to 17.45 million dong/tonne, while Vinakyoei has raised the
price from 16.55 million dong/tonne to 17.5 million dong/tonne. Other steel
producers are offering steel at 17 million dong/tonne on average.
The steel prices quoted by northern producers prove to be
much lower.
Southern steel producers say that they now have to import
ingot steel at high prices. Vietnam-Japan Company, for example, has signed a
contract to import ingot steel at US$1,180/tonne, while finished steel is
selling at US$1,000/tonne.
Pham Chi Cuong, VSA Chair, said that VSA pledged to keep
steel prices in place until the end of June 2008, if the ingot steel price did
not exceed the US$900/tonne threshold. At the time of the commitment, ingot
steel was at US$810/tonne, while the sale prices offered by northern producers
were at 15.2-15.4 million dong/tonne, and the prices offered by southern
producers were at 15-15.3 million dong/tonne. However, as the ingot steel price
has been skyrocketing, some steel producers had to raise their sale prices in
May 2008.
"Raising steel prices proves to be unavoidable. Steel
mills cannot buy ingot steel at US$1,300/tonne and then sell finished products
at US$1,000," Cuong said.
However, Cuong confirmed that the steel price will not
increase sharply, because the purchasing power is low in the rainy season. In
the past three months, VSA members sold only 260,000 tonnes of steel a month, a
decrease of 60,000 tonnes compared to previous months.
"The sale prices will be decided by the market,"
Cuong said.
In fact, steel producers now still make steel with the ingot
steel it imported several months before at low prices. Therefore, they don't
make loss even with the current sale price of US$1,000/tonne. However, Cuong
said that if producers continue selling at low prices, they will not have money
for re-investment.
