Posted on 15 Oct 2015
VSA wants 27 steel projects cancelled
The Vietnam Steel Association (VSA) has proposed relevant ministries and agencies scrap a total of 27 steel projects which are deemed as inefficient and harmful to the environment.
Eleven of these projects have not got off the ground and the remaining 16 are either infeasible or unable to meet technology requirements so as to ward off unnecessary competition stoked by a domestic oversupply.
VSA vice chairman Do Duy Thai told the Daily over the weekend that the annual construction steel capacity in Vietnam totals 11 million tons while consumption is a little more than five million tons. Therefore, it is necessary to do away with those projects using out-of-date technologies and not economically viable.
"It is okay if steel supply surpasses demand by a maximum of 30% but supply is two times higher than demand on the domestic market. Other countries allow steel supply to be 20-30% higher than demand," Thai said.
According to VSA, up to 28 out of 42 projects registered for implementation in the 2013-2025 period cannot meet all requirements set in the zoning plan for the steel industry and investment licensing.
Rampant investments in steel projects have triggered fierce competition in the industry in recent years, as supplies of steel ingots, construction steel, cold-rolled steel sheets, steel pipes, galvanized steel and color-coated steel products are 1.5-2 times higher than needed.
Local demand for construction steel this year is estimated at six million tons but the combined capacity of steel mills nationwide could amount to 11 million tons.
Speaking to the Daily recently, VSA former chairman Pham Chi Cuong said oversupply resulted from the fact that many provinces rushed to issue investment certificates for steel projects without following the zoning plan for the steel sector in previous years.
Cuong said VSA used to call for relevant ministries and local authorities to tighten controls on new steel projects to avoid an oversupply and inefficient investment in the sector.
Oversupply-triggered competition has forced many firms with weak financial positions and out-of-date technologies to withdraw from steel projects as their products have not been able to compete, according to VSA.
A number of producers have reported losses and closed their mills, especially in the north, and only big companies able to invest in advanced technologies and turn out quality products for domestic consumption and export can survive.
Last year, VSA wrote to the Ministry of Industry and Trade asking for a review of steel projects.
