Association says 20% of steel firms could go bust soon

Around one-fifth of enterprises in the country’s steel industry will likely go bust soon due to the very sluggish consumption of construction steel in the past two months, the Vietnam Steel Association warned.

Nguyen Tien Nghi, vice chairman of the association, said the steel industry had slashed its output of construction steel by now due to poor sales on the market.

At the moment, the steel industry has an annual designed output of nine million tons, but consumption is estimated at only half of production, he said.

The association estimated the total amount of construction steel sold this month at only 300,000 tons, equivalent to sales in June.

Nghi told the Daily on Tuesday that due to the slow consumption, those steel enterprises using backward technologies and consuming much power would likely be eliminated in the coming months. Such enterprises make up some 20% of the total number of steelmakers.

“The association for several years has warned against the risk of bankruptcy at backward steel mills, but investments to build new steel plants have still been poured into the industry, resulting in excessive capacity now,” he said.

Recently, Thep Viet Steel Corporation, one of the largest steel producers in the country, has decided to slash its construction steel production by half amid the dreary market conditions.

Thep Viet is now maintaining its annual output of around 500,000 tons compared to its earlier output of over 1.1 million tons.

Beside the difficulty facing steel makers, those manufacturing steel ingots for steel producers are suffering from a shortage of iron ore and coke for their production.

Do Van Thanh, former general director of Dinh Vu Steel Company in Haiphong City, told the Daily on Tuesday that two years ago, the company spent nearly VND900 billion building a furnace capable of producing 250,000 tons of ingots a year.

“However, the furnace has been inactive for over one year because of the lack of materials like iron ore and coke,” he said.

Thanh, who now serves as general director of Soc Son Steel Company, said while domestic producers have to import iron ore at a price of some US$170 per ton, mining companies in northern provinces are exporting the crude ore to China at only US$60 per ton. – SGT

Tags: Vietnam steel industry, Vietnam steel market, Vietnam steel prices