Steel association argues on regulation of compulsory reserve on steel

Ministry of Industry and Trade said that the current steel prices were baring impacts from steel billet prices on the world market so the commodity of steel must be reserved compulsorily while Vietnam Steel Association (VSA) attributed high prices of steel in Vietnam to rising input costs.

The association also contributed the point of view to Ministry of Industry and Trade’s draft on compulsory circulation reserve on some essential products including construction steel and steel billet. As drafted, the reserve requirement is 10% maximum of the steel volume and 3-5% of the steel billet volume that traders import from previous year. Retail price of compulsorily reserved steel must be at least 10% lower than market level at the selling time; market price will be announced by Ministry of Finance.

Steel billet is the input material that accounts for about 80% of steel price while domestic steel manufacturing depends on 40% of steel billet import so domestic steel price has been affected strongly by global movements. According to Ministry of Industry and Trade, compulsory circulation regulation on steel billet is essential.

However, VSA explained, steel price fluctuations in Vietnam were attributed to changes in costs of materials such as iron ore, petrol, steel billet. Till March 31, total capacity of producing construction steel in the country reached nearly 9 million tons while total sales of this kind of steel in 2010 were only 6.3 million tons.

Steel consumption only accounts for 50-60% of total capacity of companies and the domestic market in recent years never lacked construction steel.

Monthly construction steel makers of VSA reserve 500,000 tons of steel billet, 300,000 tons of steel products, excluding inventory steel billet and product volume. New regulation on retail price of steel as drafted by Ministry of Industry and Trade will benefit intermediary companies, for which the negative practices could incur in distribution, the state will suffer losses but consumers will not enjoy.

VSA now has over 50 steel billet and construction steel makers who are competing with ASEAN and China-made steel. – Vietbiz24

Posted by VBN on May 31 2011. Filed under Steel. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry