Some steel producers raised the sale prices by VND 500,000-700,000 per tonne in the last week. Rolled steel is now selling at VND 10.6 million-10.7 million per tonne, and steel bars at VND 11.8 million per tonne. Pomina’s steel has seen the price rise by VND 600,000 per tonne to almost VND 11.4 million per tonne for rolled steel, and by VND 400,000 per tonne to just under VND 12 million per tonne for steel bars. Vina Kyoei has also raised the sale price by VND 400,000 per tonne.

According to the Vietnam Steel Corporation, the demand for steel is increasing a little. In October, the corporation could sell 20,000 tonnes of steel only, while it expects to sell 45,000 tonnes in November.

Similarly, Pomina in October sold 25,000 tonnes and hopes to sell 36,000 tonnes in November.

According to Nguyen Tien Nghi, Deputy Chairman of the Vietnam Steel Association, domestic producers have to raise the sale prices because of both the ingot steel price increases in the world market after three months of continuous decreases, and the increase in demand. Nghi said that the ingot steel prices have surged from the deepest lows of US $270-280 a tonne to over US $420-450 a tonne recently (the highest peak of the ingot steel price was over US $1,000 per tonne).

Meanwhile, Dao Dinh Dong, Head of the Market Division under the Vietnam Steel Corporation, said that there exists a big gap between the steel prices in the north and the south. The prices in southern provinces are lower by VND 500,000-700,000 per tonne than the prices in the north.

Nevertheless, analysts believe that the construction steel prices will not likely increase sharply. The higher ingot steel prices will stimulate the production of ingot steel in the world, which also means a higher supply in the time to come. Meanwhile, the demand for steel in the domestic market is not likely to increase, especially from now to the end of the year, since not many construction projects will be implemented.

The Vietnam Steel Association also said that the steel price will not increase sharply as producers still have large stocks of over 200,000 tonnes of finished steel, and 500,000 tonnes of ingot steel, which prove to be enough for the market by the end of the first quarter of 2009.

Nghi has warned that there is a high possibility of China-made steel coming into Vietnam as the country now encourages the export of superfluous steel. It is highly possible that from early January 2009, China will lower the export tax on steel to 0%. If this occurs, China-made steel products will flock into Vietnam forcing the domestically-made steel to slow down.

In an effort to protect local production, the Vietnam Steel Association has asked relevant ministries to raise the import tax of finished steel products from 8% to 20%, and ingot steel imports from 2% to 5% or 10%.