Steel, cement consumption to grow 10pct this year

The consumption of steel and cement is expected to grow 10 percent this year as economic recovery will drive up the construction sector, said the Ministry of Industry and Trade.

In a report issued last Friday, the ministry projected the demand for various types of steel to rise 10 percent to 6.5 million tonnes in 2011, while cement consumption is expected to increase 9 percent to 56 million tonnes.

According to the Vietnam Steel Association, the country consumed a total amount of some 6.1 million tonnes of construction steels last year, an increase of 15 percent from 2009.

In 2010, the country also consumed over 50 million tonnes of cement, increasing 10 percent over the previous year.

In its report, the ministry also observed that steel prices fluctuated wildly in 2010 due to changes of input costs like higher power and fuel prices, interest rates, and material costs.

By the end of 2010, the price of construction steel in the market was some VND16.2 million a tonne inclusive of value-added tax, an increase of 31 percent compared to 2009.

The ministry also said dozens of new manufacturers, especially in the steel industry, will be operational this year to meet the increasing demand. These include a production expansion of Thai Nguyen Steel, and new projects by Lao Cai, Thach Khe, Thong Nhat and Southern Steel companies.

For instance, the second phase of Thai Nguyen Steel with annual capacity of some 500,000 tonnes is expected to start its production by the end of this year.

TATA Group from India is also working with Ha Tinh Province authorities for an investment license to build a steel complex project there with a total investment of around $5 billion to produce 4.5 million tonnes of steel products each year.

The ministry also said the steel market would see tougher competition this year due to imported steel products from Asean countries that will be enjoying an import tariff of 0 percent, as well as other cheap steel products from China.

Predicting changes on the market this year, Do Duy Thai, general director of Thep Viet Corp., told the Daily on Monday that prices would increase due to higher input costs.

“With the current interest rate charged by banks at between 17-18 percent, plus a 20 percent increase in prices of imported steel ingots and steel scraps as materials since mid-December, I think local steel producers will increase the selling price of steel products in the market to avoid lost,” he said.

Thep Viet has just decided to cut down on shipments to some nearby countries such as Cambodia and Laos by 50 percent because of higher steel production costs.

He added that Thep Viet used to export some 8,000 tonnes of steels to Cambodia each month, but the company has slashed the export volume by half to around 4,000 tonnes to this nearby market each month now.

For cement production, according to the Vietnam Cement Association, the country will have ten new cement plants operational this year to provide an extra capacity of 15 million tonnes for the market, raising the annual cement output to 65.8 million tonnes.

Owing to higher supply, the cement price is expected to be stable in 2011. – Saigon Times

Tags: Vietnam cement, Vietnam cement industry