Steel price drops sharply

In the first three days of May, the steel price suddenly dropped. Vietnam Steel Association (VSA) received series of documents announcing about reducing the steel price of member companies such as Pomina Steel, Vinakyoe Steel with average drop of 200,000-500,000 dong per tonne.

The delivery construction steel price at present was posted at 13.6-14.2 million dong per tonne (VAT exclusive), depending on specific trademark.
There was no change in the listed steel price in Thai Nguyen Steel Co at 14.3 million dong per tonne. However, Vu Thanh Son, one of the company’s salesmen said the company offered special discount up to 300,000 dong per tonne for the purchasers in the company’s agent network.

After eight times of increasing steel price in March and early April, this is the first time that steel makers have lowered the sales price. Despite the drop by one twelfth of the total increasing amount in the previous six weeks, the signal showed that Vietnam steel market tended to shrink.

Pham Chi Cuong, chair of Vietnam Steel Association shared that when the large steel companies announced to reduce the prices, the rest would immediately race to lower the sales price.

It is not difficult to realise the fluctuation of the steel prices in the market was because of speculation, and the consumers have suffered much disadvantage due to the negative trend.

Do Duy Thai, chair of Viet Steel Co, the parent company of Pomina Steel trademark said when the world price increased, the steel traders adjusted to raise the steel prices sharply accordingly although the steel makers did not push up the sales price sharply like that. When the steel producers decided to increase the price by one, the steel price offered by the retailers in the market was increased by 10.

And now, then there is too much stockpiled steel of 568,000 tonnes in March, while the steel billet price tended to dip from $650 per tonne to $630 per tonne, the steel speculators tended to offload the stored steel and lower the sales price to promote the market demands.

As the result, it was ironic that the domestic steel producers had to reduce the steel price in accordance with the retail price.

In the last week of April, while the steel makers showed no signal of reducing the steel price, the retail prices in the market have been automatically lowered by 200,000 dong per tonne.

In the past five days, in the steel shops that offer steel products of joint ventures of Viet Uc and Viet Han in Hanoi, the steel price was adjusted to decrease twice with total value of 400,000 dong per tonne. The consumers could buy steel at price of 16.3 million dong per tonne (VAT inclusive).

Pham Thi Hoan, the owner of a retail steel shop said on May 3, the shop offered price at 15.7 million dong per tonne (VAT inclusive), down 300,000 dong. However, Viet Uc steel mill at that time offered steel price of 15.95 million dong per tonne (VAT inclusive), that means the price offered by the agents was 250,000 dong lower than the delivery price at the factory.
It is predicted that the steel price in Q2 in Vietnam would continue decreasing, against the world trend despite the increasing prices of steel ore in the world.

Nguyen Tien Nghi, vice chair of Vietnam Steel Association said in April, the association’s members reported to sell 299,000 tonnes, equal to 52 percent of the previous month. The steel maker’s production output was estimated at 478,000 tonnes, or 85 percent against March.

In April, Pomina Steel Co reported to reach total sales volume of 53,000 tonnes, down 30 percent against the previous month, Viet Uc Steel of 11,000 tonnes, down 45 percent; while Thai Nguyen Steel of 28,000 tonnes, reducing by 60 percent, and Vinakyeo Steel of 30,000 tonnes, compared to that of last month of 40,000 tonnes.

Nghi said if the steel makers bought steel billet at price of $650 per tonne, they would suffer from loss. However, in the current context, the steel producers had to lower the price to compete in the markets.

Up to now, there were 315,000 tonnes of stockpiled steel, in addition to the steel billet used for production purpose in May of 490,000 tonnes. Therefore, there will be no steel shortage in Q2 of 2010.

It is forecasted that there would be no sharp increase in steel prices in April-June. The market recorded the highest prices of 14.5 million dong per tonne (VAT exclusive) offered at the steel factories and 17 million dong per tonne of retail price as the highest level in the steel market this year.

Vietnamnet

Tags: Vietnam steel industry, Vietnam Steel price