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Steel companies take earnings hit
Steel company profits have dropped in recent months as prices have dropped, according to the Vietnam Steel Association (VSA).
Nguyen Tien Nghi, VSA deputy chairman, said steel consumption in September fell 110,000-120,000 tonnes, a reduction of 80,000 tonnes compared to last month.
Steel prices have dropped to 16.3 million VND per tonne from the peak of 21-21.5 million VND per tonne in July, the association said.
Nghi said that lower demand has led to higher steel inventory of 900,000 tonnes among VSA members, which would be sufficient to supply the local market for the rest of the year.
A director of a HCM City-based steel production firm said that over the last two months, his company had incurred a huge loss due to lower prices.
Some smaller steel ingot producers had closed their plants due to a drop in steel sales and would incur more losses, Nghi said.
While domestic consumption is down, the 10 percent export duty has prevented steel producers from exporting products to other countries, several steel producers said.
To help the domestic steel industry, the VSA has petitioned the Government to cut the export tax to 2 percent from the current 10 percent.
The demand for construction steel has fallen sharply because of a delay in construction in recent months as many investors have not been able to access bank loans.
Banks are also refusing to lend to many individuals who wish to borrow money to buy their own home.
Construction companies have extended their building period or delayed or temporarily stopped projects, waiting until economic stability returns.
VNA
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