Steel industry seeks more Gov't help

Monday, Mar 09, 2015 07:51

Demand for steel in the domestic market has been slumping for the last few years. — Photo cafef.vn

HA NOI (Biz Hub) — The Viet Nam Steel Association (VSA) has demanded aid for overcoming difficulties, such as excess supply and growing competition from cheap imported steel that has hit the industry hard.

Demand for steel in the domestic market has been slumping for the last few years, exerting considerable pressure on steel companies, the association said.

While the total annual production capacity for construction steel has reached 11 million tonnes already, demand for construction steel is projected at around 6 million tonnes this year, according to the Ministry of Industry and Trade's estimates.

Steel companies said new investments in steel production should be given careful consideration and must be based on market demand.

According to Pham Chi Cuong, president of the Viet Nam Scientific and Technical Association of Metallurgy, given the current excess of supply over demand, clubbed with the 10 per cent growth rate per year, it might take a decade to balance supply and demand.

This calculation does not take into account the increase in imported steel in line with the participation in free trade agreements, which could boost supply further.

The import of cheap alloy steel containing Boron from China is another headache for the industry as this kind of steel faces zero tariff and offers lower prices than domestically-produced steel.

According to VSA, many steel companies have had to cut their production by up to 60 per cent or will even face closure if they failed in the competition.

Do Duy Thai, general director of Pomina Steel Corporation, was quoted by Tin Tuc newspaper as saying that while steel demand is low, the influx of steel containing Boron has made competition extremely hard for the domestic industry.

Still, this remains controversial. A representative from the General Department of Customs said competition should spur Vietnamese firms to enhance quality and quote more reasonable prices.

Previously, the Ministry of Industry and Trade had forecast that steel consumption during the first several months of this year will remain slow. — Steel firms continue to seek aid — VNS

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