Posted on 19 Jan 2009
The Vietnam Steel Association said steel consumption would remain as low as last year with a supply overhang lasting through the year.
Even if the government’s efforts to boost investment and construction prove effective, the domestic steel industry is likely to post an annual growth rate of just 2-5 percent, it said.
The industry recorded negative growth last year, managing to sell only 4.45 million tons, 300,000 tons lower than in 2007.
Local demand declined after construction firms took a serious hit from the global economic downturn, the association said.
Sales surged in the last two months of 2008 but it was probably because businesses were stocking up ahead of a hike in value-added tax that took effect on January 1.
The tax doubled to 10 percent, sending retail steel prices soaring by more than VND500,000 a ton, according to the association.
It warned steel companies to sell at reasonable prices so that they remain in business.
It warned them about harsh competition this year since Chinese steel makers could increase their exports following export and other tax breaks.
Last week, the association urged the Ministry of Finance to raise import duties on steel products to protect the local industry.
Vietnamese producers are selling steel at VND11.6-11.75 million per ton while Chinese exporters are offering their products at VND10.9 million.
