Vietnam steel producers reduce production output

In the last days of 2011, Vietnam has witnessed paradox in the domestic steel market when the export and consumption volume of construction steel products declined sharply while stockpiled surged.
Statistics of ministry of industry and trade showed that due to slow consumption situation, the steel producers have reduced production output in order to avoid stockpiled products. Therefore, the whole production volume up to the end of November was posted at 6.44 million tonnes, a continuous decline of 1.5 percent against the same period last year.

In addition, the two main import markets of Japan and China continued to reduce construction steel price, leading to unfair competition among domestic steel firms. Many enterprises have lowered the offering price by 200,000 – 300,000 dong per tonnes in comparison with the market price.

Vietnam Steel Association (VSA) revealed that steel consumption declined to lowest level in June at 298,000 tonnes. In July and August, steel price increased by 100,000- 300,000 dong per tonne, therefore, the steel producers reported gaining steel consumption volume of 483,000 tonnes.

Entering September, the market showed improvement with climbing trend in steel price at 200,000-400,000 dong per tonne, however, the steel sales volume continued dropping to 380,000 tonnes in September in comparison with the previous session, and 326,000 tonnes in October.

At the peak time of construction season, the steel consumption volume in November was posted at 350,000 tonnes only. Up to the end of November, the stockpiled volume of the enterprises under VSA was estimated at 365,000 tonnes, a sharp increase against the annual stockpile volume of about 250,000 tonnes.

Noticeably, as for stockpiled products, the steel producers had to pay lending interest of 200,000-300 dong per tonne, not to mention other costs. At present, the price for each tonne of scrolled steel to be delivered at the steel mills stood at 15.7-15.95 million dong in northern region and at 16.32-17.4 million dong in the southern one. The retail steel price in the market was posted at 18-18.7 million dong per tonne.

The steel producers found it hard to reduce the sales price, despite large stockpile volume, slow consumption situation because these steel mills still used the imported raw material with high input price. They would suffer from heavy loss in case reducing the price. Meanwhile, the trading companies blamed for low consumption volume in the market.

At present, Vietnam Steel Corp (VinaSteel) has still checked out the detailed costs that may cause in production process so as to make transparent the construction steel price in the market. Most of the member companies under the corporation and distributors have followed the guidance of ministry of industry and trade in listing the price of raw materials and sales price in their agents daily.

Vietnam Steel Association also stated that the whole nation’s steel production capacity in 2011 was estimated at about 9 million tonnes, while expected consumption volume of 5.6 million tonnes, down 10 percent year-on-year. In the coming year, Vietnam’s steel producers aimed to obtain total production volume of 9.8 million tonnes, up 4 percent against 2011. – Vietbiz24

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

Posted by VBN on Dec 20 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