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Building materials predicted to rise further in 2008
Steel price on the domestic market has increased 150,000 VND per tonne, while the imported steel billet price rose to 650 USD per tonne this year, according to Pham Chi Cuong, chairman of the Vietnam Steel Association.
Cuong predicted the steel price would continue to increase in 2008 on the back of China readjusting its export tax on steel billet to 25 percent.
Moreover, many steel billet producing projects are yet to be completed. This coupled with the increasing demand of the construction industry which is expected to push demand to over 300,000 tonnes in the first quarter of next year.
Price hikes are not the only factor influencing the domestic steel market. Limited supply is another.
Many sellers in Ha Noi do not have enough steel to satisfy the appetites of consumers. Few are able to fill an order of more than tens of tonnes.
The Vietnam Steel Association (VSA) has confirmed that the market is experiencing a shortage of rolling steel because many domestic producers have either ceased or reduced production citing stiff Chinese competition.
The price of rolling steel from China was about 100,000 VND cheaper per tonne than the Vietnamese equivalent, Cuong said.
According to the VSA, imported rolling steel has increased markedly this year to about 500,000 tonnes – three times last year’s figure.
Although large quantities of rolling steel was imported, it could not meet the demand of 2 million tonnes this year.
Meanwhile, supply shortages of steel bar are considered unreasonable.
In 2007, domestic producers manufactured more than 300,000 tonnes of steel bar, at a price that did not exceed 12 million VND per tonne.
Speculation drove the supply shortage and subsequent high price, said Cuong.
Demand for steel bar this month jumped to 382,000 tonnes due to rumours of the price increasing even further in 2008.
Certain companies are said to have stockpiled steel in anticipation of higher prices next year. In the last half of 2007, speculation saw some companies earn billions of dong when China upped their export tax from 10 to 15 percent.
Since the start of the year, the price of cement has leapt twice by 45,000 VND to 970,000 VND per tonne.
Cement price is forecast to increase yet again next year after Vinacomin announced it was raising the price of its coal by 50 to 70 percent.
Demand next year is estimated to be between 39 and 40 million tonnes, up 12 percent from 2007.
The Vietnam Cement Corporation has warned that the cement market will need to boost production next year to combat a shortfall fuelled by fewer cement projects.
VNN
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