No big changes in cement, steel and iron prices seen

Construction season has begun, the demand for building materials is hence higher, however, according to market specialists, the prices of cement, steel and iron may not see any major change.

Rather the specialists feel that steel price will continue to fall.

Steel price dropped by over three million dong per tonne compared to peak time in mid April 2010. It is expected that there will be further price reduction in the near future.

In the last month, Vietnam Steel Association (VSA) continually received notices on price reduction from its members; the average reduction is approximately 200,000 to 500,000 dong per tonne.

Recently, steel firms have announced to continue decreasing steel prices due to slack demand. The current sales price at factory is only from 11.6 to 11.7 million dong per tonne (for rolled steel) and 12.5 million dong per tonne (for steel bars). The main reason for the big reduction in steel prices, according to specialists, is that steel prices was pushed up too high previously, causing reverse reaction and unmarketable situation in the market.

According to VSA, steel inventory volume of firms is very large, in particular 371,000 tonnes for finished products and 560,000 tonnes for steel billet. Steel firms have to compete to push sales to their in stock products, and at the same time hardly find ways to cope with imported steel.

Currently over 120,000 tonnes of construction steel is imported from Asean countries with the price of less than 100,000 to 150,000 dong per tonne compared to domestic steel price. Thus, steel manufacturers have to face competition from the always- cheaper-imported steel price, despite subjecting to higher costs.

In addition, southern provinces are now in rainy season (low construction season) and steel billet price in the world market is still in decreasing trend. Therefore, steel price would hardly increase in the near future.

Cement: Supply exceeds demand: difficult to increase sales price
According to statistics of Building Materials Management department (Ministry of Construction), there are 105 cement manufacturers in the country. The capacity of the whole industry could reach 61 million tonnes per year. Whereas in the sector’s 2010 plan, the manufacturers is only expected to produce in total 53 million tonnes. Demand of the country is estimated about 50 million tonnes. This means that cement production will be at about three million tonnes in excess this year.

In May, cement consumption volume was only 4.3 million tonnes, down 14.17 percent compared to 5.01 million tonnes in the previous month, according to statistics of building materials management department. In the first five months of 2010, the total cement consumption reached only 19.67 million tonne, about 39 percent of the whole year plan. The sector’s production volume whereas already reached 20.15 million tonnes, equivalent to 40.3 percent of the plan.

According to the latest report of Vietnam Cement Industry Corporation, the current products in stock of manufacturers have reached the number of 1.4 million tonnes, including cement and clinker.

This made Ministry of Construction recently issue official documents requesting members of the sector to provide information on the status of clinker and cement production and consumption of the current and previous month. Such information should include (1) production and consumption volume; (2) sales prices at the factory and retailers; (3) difficulties in production, consumption and delivery; and (4) recommendations on resolution.

The current prices of PCB 30 and PCB 40 cement in Northern provinces are hovering 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. Since supply volume exceeds demand volume, it is difficult to increase sales price in the near future.

CafeF

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