“Vietnam Economic Times” reported on the 14th that the recent increase in steel prices in the Vietnamese market, the Ministry of Industry and Trade, the Ministry of Construction and other ministries and commissions introduced measures to control steel prices.
According to reports, in the first four months of 2021, the capacity utilization rate of Vietnamese steel companies increased by 40% year-on-year. According to data from the Vietnam Iron and Steel Association (VSA), member companies produced approximately 10.5 million tons of finished steel in the first four months, a year-on-year increase of 38.3%. Among them, construction steel, which accounted for the largest proportion, increased by 11.4% year-on-year to 3.7 million tons. The output of hot rolled coil (HRC) was nearly 2.3 million tons, a year-on-year increase of 111%. Cold rolled steel and galvanized steel reached 1.8 million tons and 1.9 million tons respectively, an increase of more than 40% year-on-year. The output of steel pipe was nearly 820,000 tons, an increase of 30%.
In the first four months, Vietnam Steel sold nearly 9.5 million tons of steel, a year-on-year increase of 40%. Among them, domestic consumption exceeded 7.3 million tons, an increase of 34%; exports were 2.2 million tons, an increase of nearly 68%. Vietnam’s economic growth is expected to exceed 6% in 2021, and the annual demand for steel will reach 27 million tons.
According to the Ministry of Industry and Trade, as a number of projects such as Banyan Hefa Iron and Steel Plant and Yishan Iron and Steel Plant are put into operation in 2020, Vietnam’s domestic construction steel production capacity will reach 14 million tons, which can ensure that domestic consumption and foreign export needs can be met. However, hot rolled coils (HRC) are still in short supply, and Vietnam’s domestic production capacity is about 5-6 million tons. In 2020, there will be a trade deficit of 9.3 million tons of hot-rolled coils (10 million tons of imports and 700,000 tons of exports). It is expected that in 2021, it is still necessary to continue to import a large number of hot-rolled coils to meet domestic production demand.
According to the report, it is expected that in 2021, Vietnam will continue to import various types of raw materials for steel production, such as about 18 million tons of blast furnace iron ore, about 6 to 6.5 million tons of scrap steel, about 6.5 million tons of coke, and about 10,000 tons of graphite electrodes. As the prices of the above raw materials are expected to remain high, they will directly affect the domestic steel market in Vietnam.
According to reports, Vietnam’s domestic steel prices have risen significantly recently. According to data from the Iron and Steel Association, the price of construction steel in May 2021 is approximately VND1,630-16.5 million per ton per ton, an increase of approximately VND1.2 million per ton from the previous month. As the price of raw materials rises, the price of finished steel may continue to increase. As a result, many construction companies are facing great pressure and are on the verge of bankruptcy. The Vietnam Construction Contractors Association (VACC) has sent a letter to the government office for help.
In this regard, the Ministry of Construction of Vietnam recently issued Document 1545/BXD-KTXD to project management committees, state-owned enterprises, local governments, industry associations, etc., proposing relevant measures to alleviate the impact of the new crown epidemic and rising steel prices. It is recommended that local governments guide local construction agencies to track market price changes and disclose building material prices and price indices in a timely manner. The Ministry of Industry and Trade issued Document No. 2612/BCT-CN to the Vietnam Iron and Steel Association and steel companies, requiring companies to control production costs and reduce the prices of finished products; expand production capacity to meet domestic demand and restrict domestic steel product exports. At the same time, the dealers will be reviewed to avoid hoarding and raising prices.
Previously, the Ministry of Industry and Trade also recommended that the Ministry of Finance adjust the import tax rate of certain steel products with relatively volatile prices. In response, the Ministry of Finance stated that it may consider adjusting the safeguard tax on billets and construction steel, so as to reduce the cost pressure on steel production and construction companies. However, it is still necessary to carefully consider reducing the import tax rate of finished steel products in order to protect the sustainable development of the domestic steel industry.
