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Fears over rising steel prices
Pham Chi Cuong, Chairman of the Viet Nam Steel Association, has suggested that domestic steel makers cut production costs instead of increasing prices to cover costs, saying this would keep steel prices low and thus encourage sales.
Cuong was commenting on several steel price rises last month. Altogether, steel makers, including Viet Nam Steel, Vinausteel, VSC-POSCO, and Thai Nguyen Steel, lifted their prices three or four times in April.
This took the price for steel up by 10 to 15 per cent to VND11 (US$612)- 11.8 million ($655) a tonne over prices in the first quarter. However, despite the increases, Cuong said steel makers were still losing VND500,000-700,000 per tonne. He said he believed the increases could have a bad effect on the domestic steel market, which had begun to report increasing demand for steel, particularly for construction.
He said he believed the increases would reduce the competitiveness of Vietnamese steel products over imported steel, which generally sold for less than the domestic product.
Cuong said the price rises did not amount to much, but they did not make customers happy.
Nguyen Minh Xuan, director of HCM City Metal Company, said steel makers were forced to increase their prices to compensate for a slump in the market that lasted for more than a year. The downturn was largely caused by the world economic crisis.
Xuan said lower prices were introduced to try and stimulate steel consumption, which they did.
Commenting on the latest increases, he attributed them to fluctuations in the exchange rate between the dong and the dollar.
They were also based on an increase in the import tariff on steel and a rise in the world price of pig iron from $360 to $420 per tonne.
The Steel Association said total supply of domestic steel was expected to double on the domestic market this year and steel makers should pay attention to a potential oversupply.
Domestic production has reached an annual capacity of 4.5-4.6 million tonnes of pig iron and 7 million tonnes of building steel.
However, the estimated demand for steel for 2009-10 is only about 3.8 million tonnes.
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