Steelmakers need better distribution system

Local steel producers should implement a proper distribution system in order to help stabilise the domestic steel market, according to an official from the Ministry of Industryand Trade.

Ho Thi Kim Thoa, deputy minister of industryand trade, said that the Viet Nam Steel Association and the Viet Nam Steel Corporation (VNSteel) should help stabilise the domestic steel market, current prices of which are controlled by private distribution systems which have caused prices to soar.

According to association statistics, demand for steel during 2011 was set to reach around 6.5 million tonnes with domestic production expected to reach nearly 9 million tonnes, supply far exceeding demand.

“This problem has revealed the weakness of the distribution system. The demand and supply imbalance has led to distortions in the price of steel during recent years”, Thoa said.

For example, VNSteel, not having its own distribution system, often sells its products at whole sale prices, which are roughly VND250,000-600,000 (US$12.2-29.3) per tonne lower than market retail prices.

It is difficult to regulate steel prices amongst private traders without a suitable system, Thoa said.

In order to develop an effective system, VNSteel should inform consumers about the real state regarding the demand and supply of steel. If consumers could be made to believe that supply is currently lower than demand they could help boost the market by buying steel stocks in order to help increase prices, Thoa said.

Enterprises could join the Government’s price stabilisation programme by selling their products at reasonable prices, she added.

The association expected the consumption of steel products during May to reach 440,000 tonnes, a slight increase compared to the 439,000 tonnes of last month.

Consumption is set to continue increasing during June and July because some projects were planned to promote construction from the third quarter onwards, according to the association. — VNS

Tags: Vietnam steel industry, Vietnam steel market, Vietnam steel prices