Five steel producers fined for rapid price hikes

The inspectors of the Ministry of Finance has imposed fine on five out of the six steel companies it inspected.

According to the inspectors, construction steel from the inspected companies increased sharply in price during the first three months of 2010.

By March 23, the price increased by 13 percent, nearly double the average increase for all of 2009. From March 15 to March 23, when companies were being inspected, the Vietnam Steel Corporation raised its price four times at an increase of 13 percent (1300 dong per kilo).

During the same time, Thai Nguyen Cast Iron and Steel Company adjusted prices five times with an increase of 7.8 percent. Other companies also raised rates, hiked 1.9-6.7 percent.

According to Tran Huy Truong, Deputy Chief Inspector of the Ministry of Finance, current regulations require state-owned corporations to register steel prices. Many companies have not done so, and have been fined. Others are guilt of ignoring regulations on quoting prices.

Truong admitted that the fines are not heavy. Each of the five enterprises must pay 7.5 million dong, or a total of 31.5 million dong.

Regarding of the reasons behind price increases, inspectors maintained that they have not found any huge violations and believe that the enterprises had good reasons to raise prices. The rising price of scrap steel, ingot steel and input materials for making steel have all contributed to the price hikes.

According to the inspectors, ingot steel alone accounts for 95 percent of production costs and it has risen in cost by 13 percent over the last three years, forcing steel manufacturers to raise prices.

Responding to the information that steel companies raised prices too sharply –by 20 percent within 15 days – violated the law. Truong observed that inspectors will continue to keep a close watch over moves by steel manufacturers.

They still believe, even with expanded costs, that steel manufacturers need to reconsider their production process and cut down expenses.

The inspectors have further proposed amending current regulations which say that only enterprises in which the State holds stakes of 51 percent or higher must register prices with government agencies.

Truong commented that it is unreasonable to allow foreign-invested enterprises and privately-run companies to be exempt from registering their prices too, stressing that businesses in all economic sectors need to be treated equally.

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Tags: Vietnam steel industry, Vietnam steel prices