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Steel, cement seeking buyers
Several months ago, steel and cement prices moved up everyday, and now, steel and cement prices are going down everyday.
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* Mai Anh Tai, Deputy General Director of Ha Tien 1 Cement Company, said that it is now the low sales season. Neither producers nor distributors can fulfill targeted consumption plans. He knows an enterprise that can sell 40,000 tonnes of cement, while it planned to sell 60,000.
* The steel price decreases have also been attributed to the decreased ingot steel prices on the world’s market. After reaching $1,200/tonne in late July, the ingot steel offered by Chinese suppliers has fallen to $960-970/tonne. According to the Vietnam Steel Association, the steel volume sold by its members decreased by 16.53% in July (250,000 tonnes) compared to previous months.
Northern steel producers planned to ship steel to the south as the price in the south was VND1mil/tonne higher than in the north. However, southern producers cut prices before northern producers implemented their plan. |
The continued price decreases in the last two weeks have been surprising contractors. Nguyen Quoc Dai, Director of Minh Thong private-owned construction enterprise in district 7, HCM City, said he thought that suppliers had made mistakes in quoting prices – he could not believe that prices had dropped so dramatically.
Dai said that the steel price has decreased by VND2-2.5mil/tonne over the beginning of July. “You just need to make a call to suppliers and say the volume you want. The steel will be carried directly to the construction site, and you only have to pay VND18.9mil/tonne instead of VND21mil/tonne,” he said.
After slashing the steel price by VND1-1.5mil/tonne at the end of July, some steel producers have reduced sale prices further due to the weak demand. Steel mills now sell products at VND18.2-18.5mil/tonne with deliveries at the mills, a decrease of VND2-3mil/tonne.
Dai said that the retail price has been decreasing more slowly than the mills’ wholesale prices. The retail prices are still VND0.8-1mil/tonne higher than the mills’ prices as retailers now still sell products they imported before at high prices.
The business director of a joint-stock company confirmed that sale prices have been decreasing as purchasing power is weak in the low season. “Continued rain has been slowing down the construction process, while a lot of construction works have been going perfunctorily, which has forced producers to reduce prices to stimulate purchasing power.”
The southern branch of the Vietnam Steel Corporation is offering discounts of VND300-340,000/tonne to high-rise buildings, though the corporation’s sale prices are VND500,000/tonne lower than those offered by private-owned and joint-venture mills.
According to Nguyen Tien Nghi, Deputy Chairman of the Vietnam Steel Association, the northern market is bleaker than the southern market.
The same situation is now occurring in the cement market. Huynh Anh, the owner of a construction material shop in district 7, HCM City, said that sale prices are now hovering around VND65-69,000/pack, with which, retailers can get the profit of VND500/package. However, despite the low prices, purchasing power has still decreased by 60% over last month.
Due to the weak purchasing power, producers have to offer higher commissions to sales agents and extend payment deadlines. The business director of a cement joint venture said that key distributors will get VND5-10,000/tonne if they can increase their sales volumes.
Experts say that steel prices in August may decrease further if the purchasing power remains weak. They also say that the cement price may also decrease further though producers say that they cannot cut prices anymore as the clinker import prices remain high.
VNN
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