Cement, steel prices: the potential risk of instability

The prices of two “hot items” which are cement and steel have dropped in May, due to two factors including (1) the fall in prices of various construction materials and goods on the world market together with the increase in supply; and (2) the state continues stabilising the prices of essential goods such as electricity, coal, gasoline in the domestic. For construction steel, since the prices of imported steel billet and demand for steel both declined, steel products prices fall.

Steel prices range from 13.6 to 14.08 million dong per tonne.
According to June forecast, world steel billet price may rise slightly compared to May, but inventory of finished products is approximately 300,000 tonnes, while that of steel billet is 490,000 tonnes, therefore, steel prices will continue to go down.

According to Ministry of Industry and Trade and Vietnam Cement Industry Corporation (Vicem), prices of PCB 30 and PCB 40 cement in Northern provinces range from about 0.92 to 1.1 million dong per tonne, down approximately 25,000 dong per tonne compared to that of May due to no increase in demand. In southern provinces, prices are stable from about 1.18 to 1.36 million dong per tonne.

However, as a rule, June is a construction season, the demand for construction materials will continue to increase. Despite the world market trends of prices of steel billet and clinker are likely to be stable, but because of distribution looses in the domestic market, there are possibilities that steel price may go up again in the end of June.

At the Conference on “Implementing the price management, guidance and administration in remaining months of 2010″, organised by Ministry of Finance and recently held in Da Nang, Nguyen Tien Thoa, director of Price Control Agency (Ministry of Finance) said that iron, steel and cement prices tend to increase for the rest of the year.

Although the world economy has been showing signs of recovery, there is still a potential risk of price volatility mainly due to the government’s stimulus packages. It is obvious that construction season has begun with “latent fever” of the prices of iron, steel and cement as usual.

CafeF

Tags: Vietnam cement, Vietnam cement prices, Vietnam steel, Vietnam steel prices