Steel market price lower than price of factories

The construction steel price offered by Vietnam Steel Corp in HCM City was posted at 11.87 million dong per tonne on January 11, 2010. However, the offered price from the steel mill sent to customers on May 10, 2010 was 15 million dong per tonne, an increase of over three million dong since the beginning of the year up to now.

However, the market price was lower than the price offered by the steel makers due to large volume of stockpiled steel in the market. Pham Chi Cuong, chair of Vietnam Steel Association (VSA) revealed that the steel sales volume last month decreased by 35-60 percent. In the coming rainy season, it is predicted that the steel consumption volume will continue dropping.

Nguyen Van Bac, director of Vietcity Construction Co said the construction works in 2010 fell in comparison with the same period of last year. According to Pham Duc Phu, Phuong Dong Designing and Construction Co’s director, the number of construction projects to be conducted and finished this year reduced by half against the previous year due to the delay in large projects.

The slump in steel price also resulted from harsh competition with imported steel. The association revealed that there have been over 120,000 tonnes of construction steel to be imported from Asean countries since the beginning of this year. In addition, the world’s steel billet price dropped by $20-30, from $650 to $620 per tonne. Cuong added that apart from the plunge in domestic steel consumption volume and the dipped steel billet price, the domestic steel firms had to compete with imported steel from Asean countries, resulting in the stability in steel prices in the near future.

Within the period of the whole March and early half of April, the steel price increased by eight times, so when some large steel producers started lowering the sales price, the other enterprises also raced to drop the price. Lately, while the steel makers increased the offered prices gradually, the steel price in the market has been pushed up sharply due to speculation. When the steel billet price dropped, the huge amount of stockpiled steel caused the steel mills to lower the offered price. The speculators also had to quickly reduce the sales price because of worries that the price would continue dropping, which explained the reason why the market price of steel products in the market was lower than the prices offered by steel makers.
SGTT

Tags: Vietnam steel industry, Vietnam Steel price

Posted by VBN on May 13 2010. 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