FX pressure keeps steel prices rising

Steel prices are likely to continue rising in the coming month, predicts Viet Nam Steel Association vice chairman Nguyen Tien Nghi, who blamed foreign exchange rate pressures between Vietnamese dong and US dollar and the high price of raw materials on the global market.

Domestic steel prices had already jumped this month by VND300,000-800,000 to VND15.5-16.3 million per tonne, Nghi said. Global prices of inputs had also climbed, with pig iron rising in January by US$10 per tonne to a range of $557-560, while scrap steel prices had risen by $50 to $500 per tonne.

Imported coal was also a major input, particularly for southern steelmakers, and coal imports from Australia were heavily impacted by recent flooding there, according to the Ha Noi Department of Industry and Trade.

The steel industry is also a heavy consumer of electricity, and Electricity of Viet Nam has already proposed to increase electrical rates beginning March 1, a move expected to further increase the price of steel.

The move also threatens to reduce the nation’s competitiveness as a steel producer. Electrical costs for the steel industry were currently about half of costs in other countries in the region, according to the Ministry of Industry and Trade. This has enticed many foreign investors to build steel plants in Viet Nam. The EVN has also predicted some electricity shortages later in the year, which would further affect production.

Meanwhile, domestic steel consumption was expected to decline to 330,000-400,000 tonnes this month and 350,000-370,000 tonnes next month, Nghi said, as the construction industry takes a breather during the Tet (lunar new year) holidays. — VNS

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