Exports to tackle big steel glut

Vietnam’s steel makers will accelerate exports in 2011 to avoid an excessive domestic market surplus.

Local steel makers have targeted to achieve a 10 per cent increase in their overseas shipment volumes in 2011, particularly with deformed steel bars, steel wire rods, cold-rolled steel and zinc coated steel.

According to the Vietnam Steel Association (VSA), the country will consume about 5.7 million tonnes of deformed steel bars and steel wire rods this year, accounting for only 73 per cent of domestic manufacturing capacity of 7.8 million tonnes.

Vietnam will be capable to produce roughly three million tonnes of cold-rolled steel and two million tonnes of zinc coated steel this year, nearly double its consumption capacity for each kind of product.

“We have been seeking local government’s support to help the steel makers join national export promotion programmes this year,” said VSA chairman Nguyen Tien Nghi.

“We have seen many potential markets in Asia and Africa for Vietnamese steel products,” he said.

In 2010, local firms exported around 1.2 billion tonnes of steel worth $1 billion, more than 2.5 times higher than previous year’s volume and value, according to latest Ministry of Industry and Trade (MoIT) data.

They also earned $820 million from shipping steel-made products abroad last year, up 35.7 per cent year-on-year.

Laos and Cambodia are currently the biggest export markets of Vietnam’s steel makers.

“We made very good exportation last year. We have to keep on with the pace to ensure local product stability and avoid surplus in the domestic market,” Nghi noted.

Under the MoIT’s available data, Vietnam currently has a total of 74 steel projects with designed capacity of more than 100,000 tonnes per year each.

The MoIT anticipated that local steel facilities’ supply in 2015 would be 1.5-1.8 times higher than demand. Overall manufacturing capacity in the next five years would be 35.3 million tonnes per year, while demand would be only around 15 million tonnes.

In order to help local steel firms avoid excessive competition from overseas steel, the MoIT has decided to extend the application of the automatic import licence mechanism on several kinds of steel imports through December 31, 2011.

The imports subjected to the mechanism include cold-rolled steel and unalloyed steel which have been oversupplied by local firms. “We have experienced serious competition of imports from overseas, including those from ASEAN, China and India,” Nghi said.

“For example, the Chinese 6 – 8mm diameter bars now hold 34 per cent of Vietnamese market share while the other 53 per cent held by imports from other ASEAN countries,” he added.

According to the MoIT, Vietnam used about 11 million tonnes of steel of all kinds last year, including 6.1 million supplied by local manufacturers and the remaining was imports.

The consumption volume is anticipated to increase by 8 per cent to nearly 12 million tonnes this year. – VIR

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Posted by VBN on Jan 13 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

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