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Domestic producers panic as foreign steel floods Vietnam
Vietnam’s steel producers are very nervous about the flow of foreign steel into the country. Steel importers are being heavily criticized for importing steel in such huge quantities and making the domestic market stagger.
The volume of cold rolled coil (CRC) steel products imported into Vietnam has always been high. In 2008 and 2009, the domestic market consumed one million tons of CRC, including 750,000 tons of imports. In the first six months of 2010 alone, 775,000 tons of CRC were consumed, of which 275,000 tons were imports. Steel from Japan, China, Taiwan, South Korea have been piling up in the Vietnamese market.
Meanwhile, domestic steel mills’ output has far exceeded demand. The six operational steel mills churn out 2.4 million tons of steel yearly, or double the demand. Some now question why Vietnam imports steel when domestic mills can meet demand and produce the same level of quality.
Deputy Director of Phu My Flat Steel Company (PFS) Tran Quang noted that whenever the steel supply is profuse, big steel manufacturers try to “conquer” Vietnam’s market by offering low prices. Domestic producers are then pushed against the wall. Analysts observe that the gap between import and domestic prices has reached 500,000-700,000 dong per ton.
While steel imports to Vietnam have exploded, other regional countries have set strict controls on steel imports. Indonesia, for example, has applied an import licensing scheme over the last 1.5 years.
Foreign enterprises that want to export steel to Indonesia must register and ask for permission from competent agencies, while domestic enterprises must submit regular reports on steel imports. Indonesia’s Ministry of Trade recently investigated anti-dumping duties on hot rolled steel plates imported from China, Singapore and Ukraine.
As for Malaysia, the country not only imposes high tariffs (25 percent), but also has an import licensing scheme on some steel products.
Can steel imports be controlled here? The question has caused headaches for many Vietnamese steel producers. “There should be a suitable mechanism that allows government agencies and enterprises to cooperate and control imports,” asserted a director of a HCM City steel company.
The Ministry of Science and Technology is building up national standards for steel products. “We must not allow low-quality imports. In fact, many low quality products have been imported to Vietnam as second-class products,” Deputy Director of PFS Tran Quang remarked.
On November 3, 2009, PFS and Posco Vietnam sent documents to the Ministries of Finance, Industry and Trade, Science and Technology, and Vietnam Steel Association, asking for measures to protect local producers.
The Ministry of Industry and Trade released Circular No.22, valid from July 5, 2010 to December 31, 2010, to apply the automatic import licensing plan on some kinds of steel products. The plan will help ministries track the import volume, import value and kinds of imports.
Tu Liem
vietnamnet
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