Steel oversupply defies weak demand

Friday, Nov 08, 2013 09:00

A worker arranges steel at Thai Nguyen Iron and Steel Corp. Steel makers in Viet Nam are expected to produce 10 million tonnes of steel this year, up 8.5 per cent over last year. — VNA/VNS Photo Trong Dat

HA NOI (Biz Hub)— Steel makers in Viet Nam are expected to produce 10 million tonnes of steel in 2013, up 8.5 per cent year-on-year, even though the real estate market remains frozen.

The Viet Nam Steel Association (VSA) attributed the contradiction to the imbalance between supply and demand.

"While the real estate sector, the main consumer of steel products, is still in the red, massive amounts of cheap imports from China caused an oversupply and forced many steel companies to scale down production or even halt operations," said VSA chairman Pham Chi Cuong.

Speaking at a VSA meeting on Wednesday, Cuong called on steel makers to work together to overcome these difficulties and avoid unhealthy competition.

Construction steel sales in September declined 3.87 per cent against August and 2.29 per cent year-on-year to 353,792 tonnes, according to the association.

Production in the same month also fell 9.46 per cent from August and 7.43 per cent against September 2012 to 347,780 tonnes.

However, in the first nine months of this year, production reached 3.36 million tonnes, a marginal increase of 0.02 per cent against the same period last year, while consumption rose 2.46 per cent to 3.38 million tonnes.

The steel inventory reached 317,504 tonnes in the first nine months of this year. Producers had a steel ingot inventory of 520,000 tonnes, which was expected to meet production demand in the coming months.

Meanwhile, the association said the building season got off to a slow start in September, as many storms and floods hampered projects.

VSA expected steel prices to remain stable, while production and consumption would also see little change in the coming months. — VNS

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