Vietnam takes action to cool down steel price

Vietnam Economic Times reported on Thursday that the steel prices in Vietnam market have risen recently, and Ministry of industry and trade and Ministry of construction of Vietnam issued measures to regulate steel prices.

The report said that in the first four months of 2021, the capacity utilization rate of Vietnamese steel enterprises increased by 40% year on year. According to the Vietnam Steel Association (VSA), member enterprises produced about 10.5 million tons of finished steel in the first four months, an increase of 38.3% year-on-year. The construction steel, which accounts for the most, increased by 11.4% year-on-year, to 3.7 million tons. The output of hot rolled rolling plate (HRC) is nearly 2.3 million tons, an increase of 111% year on year. Cold rolled steel and galvanized steel reached 1.8 million tons and 1.9 million tons respectively, with a year-on-year growth of more than 40%. The output of steel pipe is nearly 820000 tons, up 30%.

In the first four months, the sales volume of Vietnam steel was nearly 9.5 million tons, up 40% year on year. Domestic consumption exceeded 7.3 million tons, up 34%; Exports of 2.2 million tons, up nearly 68 per cent. Vietnam is expected to grow more than 6% in 2021, and the demand for steel will reach 27 million tons in the whole year.

The Ministry of industry and Trade said that the domestic construction steel production capacity of Vietnam reached 14million tons, which can ensure that domestic consumption and export demand can be met. However, the hot rolled rolling plate (HRC) is still in short supply, with a domestic capacity of about 5-6 million tons. In 2020, the trade deficit of hot rolled rolling plate is 9.3 million tons (10 million tons of imports and 700000 tons of exports). It is expected that a large number of hot rolled rolling materials will still be imported in 2021 to meet the domestic production demand.

It is expected that Vietnam will continue to import various types of steel production raw materials in 2021, such as about 18million tons of blast furnace iron ore, about 6-6.5 million tons of scrap steel, 6.5 million tons of coke and 10000 tons of graphite electrodes, the report said. As the above raw material prices are expected to remain high, they will directly affect the domestic steel market in Vietnam.

The report said that the recent domestic steel prices have risen significantly. According to the data of the iron and Steel Association, the price of construction steel in May 2021 was about 1630-16.5 million Dong / ton, an increase of about 1.2 million Dong / ton on a month basis. As the price of raw materials increases, the price of finished steel may continue to increase. Many construction enterprises are facing great pressure and are on the verge of bankruptcy. The Vietnam construction contractor's chamber of Commerce (vacc) has sent a letter to the government office for help.

In this regard, the Vietnamese Ministry of Construction recently issued 1545 / BXD-KTXD documents to the various engineering project management committees, state-owned enterprises, local governments and trade associations, and put forward relevant measures to ease the impact of COVID-19 and steel price rise. It is suggested that local governments guide the construction departments to track the market price changes and disclose the price index of construction materials in time. Ministry of industry and Trade issued 2612 / bct-cn document to Vietnam iron and Steel Association and steel enterprises, which requires enterprises to control production cost and reduce the price of finished products; Expand capacity to meet domestic demand and limit domestic steel exports. Meanwhile, the dealers shall be reviewed to avoid hoarding and price raising.

Previously, the Ministry of industry and trade also suggested that the Ministry of Finance adjust the import tax rate of some steel products with high price fluctuation. In response, the Ministry of Finance said it might consider adjusting the safeguards tax on billet and construction steel, thereby reducing the cost pressure of steel producers and construction enterprises. However, it is still necessary to consider carefully reducing the tax rate of finished steel import to protect the sustainable development of domestic steel industry.