Domestic steel prices increase
Domestic steel prices have increased again by 200,000 to 700,000 dong per tonne, after four times of reduction in prices.
Price for Southern steel (of Vietnam Steel Corporation-VNSteel) has gone up by 700,000 dong per tonne.
Prices for Viet Han steel and Viet Duc steel have risen by 200,000 and 100,000 dong per tonne, respectively. Viet Duc Steel has the lowest increase.
The current selling prices at factory (not including VAT and discounts) are fluctuating from 12.2 to 13.26 million dong per tonne, while retail prices for construction steel are ranging from 14.2 to 14.4 million dong per tonne.
VSA attributed the price increase to a rise in prices of steel billet and scrap steel on the global market.
Explaining on the cause of the price increase, Vietnam Steel Association (VSA) said, it is due to the increase of prices for steel billet and scrap steel in the global market, with steel billet being sold for $560 per tonne in July, up by $60 per tonne compared to June. Scrap steel price also increased from $350 to $380 per tonne. Many domestic steel firms have pushed up the selling price by 100,000 to 500,000 dong per tonne for each time of increase.
Findings from survey in some sales agents in Hanoi show that retail price for construction steel of some joint ventures such asn Steel, Viet Steel fluctuate around 14.2 to 14.4 million per tonne. According to owners of some building ma Viet-Australia Steel Company, VSC-POSCO Steel Corporation is at 14.5 million per tonne, Thai Nguyeterials stores, when construction steel price goes up, consumers tend to buy-in, due to worries about further increase. However, for this time, purchasing power in the market has dropped significantly, by 40 to 50 percent compared to the previous month.
This fact is different to VSA’s forecast, in which steel consumption power is expected to be optimistic in July. VSA said if the consumption volume in April and May just reached 299,000 tonnes and 283,000 tonnes, respectively, and 355,000 tonnes in June, in July it would reach higher level, from 360,000 to 390,000 tonnes.
According to vice President of VSA Nguyen Tien Nghi, with the current price increase, steel producers would only break even, or have little profit. This is because two months ago, when consumption was gloomy, firms accepted to suffer losses, reduced the selling price to 11.3 million dong per tonne, below production cost, in order to ensure capital turnover and stimulate demand. The current price increase is considered appropriate, since it ensures business efficiency for firms, is acceptable for consumers, and reflects the true price level of the market.
The price increase for finished products would only be acceptable if steel sector still has to import 60 to 70 percent steel billet as in the past. However, from 2008, steel billets producers in the domestic have managed to provide about 50 percent of steel demand and nearly 60 percent in 2009. The sector thus is less dependent on imported sources.
When price for steel billet in the global market was just about to increase, domestic firms have immediately pushed up the selling price. This has created opportunities to foreign steel to flood the market and caused various difficulties to domestic firms.
Nghi added that, while businesses already have difficulties in selling domestic steel, they have to compete with rolled steel imported from Asean market, which is offered at much cheaper price compared to domestic price, by 500,000 to 700,000 per tonne. From the beginning of the year, there have been about 222,000 tonnes of rolled steel imported in Vietnam, up by 124 percent compared to the same period of 2009. For June alone, although price reduction has made in the domestic, foreign steel still flooded domestic market with over 41,000 tonnes (accounting for 41 percent the total monthly imports).
For that situation, VSA has given warnings to domestic producers not to let the market be in shortage and not to push the price up too high in order to prevent foreign steel from flooding the domestic market, so that avoid losing market shares at the home market. – Vietstock
Tags: Vietnam steel industry, Vietnam steel market, Vietnam steel prices