Vietnam Industrial Parks InfoGate ! Industrial Zones ! Export Processing Zones ! High prices opening door for imported steel

Imports flocking in

According to the General Department of Customs, in the first five months of the year, 139,479 tonnes of coil steel were imported into Vietnam. The figure is equal to 46.5 percent of the total steel imports of the whole year of 2008.

The noteworthy thing is that within the first 15 days of May of this year, 29,000 tonnes of coil steel were imported into Vietnam, equal to the construction steel imports for April 2009. Just within the first 10 days of June 2009, 40 tonnes of coil steel were imported into Vietnam from ASEAN countries.

Commenting about the imports flooding the domestic market, the Vietnam Steel Association (VSA) said that it is the increased prices of domestically-made steel products which has created favourable conditions for China-made and ASEAN-made steel, which have low prices, to penetrate the domestic market.

The Vietnam Steel Corporation (VSC) on June 18 said that imported coil steel is being sold for 200-300,000 less per tonne than VSC’s prices.

In fact, domestic producers once kept prices at reasonable levels. For example, in the first three months of the year, the construction coil steel was priced at 10.2-10.3 million per tonne, while bar steel at 10.3-10.8 million per tonne.

However, the producers, reasoning the ingot steel price increase of $20-30 per tonne, scrap steel $15-20 per tonne and the ingot steel tax increase by 3 percent, raised the sale prices beginning in April. The decision was backed by the higher demand for steel thanks to the implementation of a series of big construction projects. The prices have been raised to 10.6-10.8 million per tonne for coil steel and 10.9-11.3 million per tonne for bar steel.

Analysts have warned that by raising sale prices, domestic producers have been paving the way for import products which always have low prices, to flock into the market.

Domestic producers able to hold market?

Doubts have been raised about the capability of domestic steel producers in retaining the domestic market.

For many years, producers have always acted the same: They rush to raise sale prices right after there are some fluctuations with the ingot steel prices, even though they still have big stocks.

Analysts say that move would have been acceptable in previous years, when Vietnam had to import 60-70 percent of the ingot steel needed to laminate steel domestically. However, as the situation has become different, enterprises need to find a new way to behave. Vietnam now can produce nearly 60 percent of ingot steel needed, which means less reliance on ingot steel imports.