|
Steel, cement prices fall on low demand
Steel and cement prices have plummeted in the last two weeks but, with demand becoming sluggish, manufacturers are struggling to sell their products.
Nguyen Quoc Dai, director of a private construction business in Ho Chi Minh City’s District 7, said steel prices have fallen by VND2 million- 2.5 million per ton since the beginning of July to VND18.2 million-18.5 million (US$1,096-1,114).
“You can buy as many tons as you want and the producers will make free delivery,” Dai said.
The Vietnam Steel Corporation, whose prices are already VND500,000 a ton lower than private and joint venture manufacturers, is offering a further cut of VND300,000- 340,000 for big buyers.
In the early part of this year prices had doubled, and home-builders and building contractors faced a hard time.
A sales executive at a HCMC steel joint stock company, who wished to be unnamed, said the situation has changed now with consumption of building materials falling sharply in the rainy season.
“Constant rains hinder construction and also delay new projects.” Steel demand is even weaker in the north and the average price there now stands at VND17.5 million a ton, Nguyen Tien Nghi, vice president of the Vietnam Steel Association (VSA) said.
VSA figures show that its members sold 250,000 tons in July, 16.5 percent down from June.
Steel feedstock prices have also fallen.
Billet imported from China is now $230-240 per ton cheaper than at the end of July.
Cement down too
The cement market has also started to cool down, with August consumption in HCMC falling by 60 percent month-on-month.
Mai Anh Tai, deputy director of Ha Tien 1 Cement Joint Stock Company, said producers and distributors have failed to achieve their sales targets.
Huynh Anh, a building-materials retailer in District 7, said sales have plunged despite falling prices.
Retailers make a mere VND500 profit from a 50-kilogram bag of cement they sell for VND65,000- 69,000, Anh said.
Steel and cement producers are also offering special discounts to regular customers.
A sales executive at a cement joint venture, who wished to remain unnamed, said several large wholesalers are getting discounts of VND5,000-10,000 a ton.
Their steel counterparts get discounts of VND30,000-100,000.
But this is not enough to increase offtake.
A steel wholesaler, speaking on the condition of anonymity, said the discount is attractive but he does not plan to buy much because he already has a large inventory bought when prices were up to VND20.5 million ($1,200) a ton.
The wholesaler is, in fact, hoping to liquidate the stocks quickly to repay bank loans.
Prices are likely to fall further if demand remains low.
Analysts said retailers could also hope to enjoy discounts, with consumers getting steel at not much higher than wholesale prices.
Cement producers said, on the other hand, they can hardly cut prices further because they still have to import clinker at high prices.
Retailers would have to offer competitive prices, lowering their margins, to achieve high sales, analysts said.
VNN
|
