Vietnam’s steel sector may suffer negative growth of 8pct in 2011

The year 2011 was seen as a difficult year for Vietnam’s steel industry sector, especially in June 2011, steel consumption reached only 298,000 tons – a figure was considered very low in recent years, Nguyen Tien Nghi, vice chairman of Vietnam Steel Association (VSA) said.
Totally, in the first ten months of 2011, steel consumption reached only 1.52% compared to the same period last year. Nghi forecasted if this growth continues to be maintained, the average growth of steel sector in Jan-Nov 2011 will be negative against 2010.

According to Nghi, the government’s policy to cut down public investments and the State Bank of Vietnam (SBV)’s tightening credit policy under the government’s Resolution No 11 have strongly and directly impacted the steel sector.

Nghi added, by the end of this year, stockpiled steel volume would be about 300,000-400,000 tons. This figure is considered higher than the common level (averaging at 230,000-250,000 tons). Therefore, currently steel manufacturers are producing perfunctorily to limit the volume of steel inventory in the coming time.

Also in 2011, five steel rolling companies can start production, including Thai Trung steel (Thai Nguyen province) with capacity of 500,000 tons, three factories in Da Nang with capacity of 250,000 tons each are expected to be completed in December and one plant in the southern province of Binh Duong with an estimated capacity of also 250,000 tons.

As noted, in the current context, most of these plants have no intent to put production lines into operations.

The country’s rolled steel capacity is estimated at nine million tons this year while domestic consumption is expected (equalling to last year) at 5.6 million tons (VSA’s members at 4.9 million tons and the others at 700 tons). Thus, stockpiled steel capacity this year would be about four million tons.

Therefore, Nghi said that competition in the steel industry will remain fierce in the future and the enterprises with high debt structure and unreasonable investments would be very difficult to survive. – Vietbiz24

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

Posted by VBN on Dec 2 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