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Banks funding steel projects selectively
Banks have promised to continue funding steel projects. However, analysts say that even banks’ money cannot save the steel industry in the fourth quarter of the year.
The Vietnam Steel Association (VSA) and 10 members of the Vietnam Banking Association have held a meeting to discuss ways to help steel enterprises to maintain production.
Pham Huy Hung, General Director of the state-owned Vietinbank, said that the bank would continue pumping capital into steel production, though the industry is facing big difficulties.
However, Hung said that the bank’s investment portfolio will be more selective. Vietinbank will only provide capital for projects related to ore mine exploitation, ingot steel and finished steel production.
To date, Vietinbank has provided over VND1,000bil for the steel industry, and the figure is expected to keep rising. The bank inked a contract on loaning $72mil to the Vietnam Coal and Mineral Industries (Vinacomin) to invest in the Lam Dong bauxite-aluminum complex.
The biggest problem now for steel producers is big stocks of commercial steel. Statistics show that by the end of October, Vietnam had 1.84mil tonnes of ingot and finished steel, which is enough to meet the demand of the whole country for 4-5 months.
Will bank’s money be able to save steel industry?
Analysts still have doubts if the capital from banks can help rescue the steel industry. They say that the biggest problem now for steel producers is not capital shortage but the big stocks.
As demand remains weak, it is expected that it will take many months for them to clear their stocks.
Though the Ministry of Finance has lowered the steel export tax to 0% in order to stimulate exports, Vietnamese producers are not much interested in exporting steel as the world’s prices have been sliding.
The members of the Vietnam Steel Association, who think that the best thing to do now is …to do nothing, have reached an agreement on keeping the sale price at 40% higher than the world’s prices. However, analysts say that the measure will not help.
Hung from Vietinbank said that in the context of the steel material price decreases in the world’s market, the bank will only provide capital for enterprises which have cleared their stocks. The new capital can only be used to import cheap materials to make finished products.
Nguoi Lao Dong
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