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VN steel manufacturers face difficulties as prices drop and inventories rise

According to the Vietnam Steel Association (VSA), in the first nine months of 2019, domestic steel output reached 18.83 million tons, an increase of 6.7 percent compared with the same period last year.

More than 17 million tons were sold during that time, up 8.5 percent, which included more than 3.5 million tons of exports, a 2.9 percent increase. 

 

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Though steel sales, including exports, have increased, steel manufacturers complain that the competition in the industry is stiffer than ever as domestic production capacity has far exceeded market demand.

Meanwhile, cheap imports have arrived en masse: in the first eight months of the year, Vietnam imported more than 10 million tons. Also, foreign manufacturers are accelerating their investments in Vietnam, putting pressure on Vietnamese enterprises.

Ding Cong Khuong, director of Khuong Mai Steel JSC, specializing in distributing steel products, said many steel mills were incurring losses.

“Enterprises with higher inventory levels incur bigger losses,” he said, adding that global steel trading was growing slowly.

According to the Vietnam Steel Association (VSA), in the first nine months of 2019, domestic steel output reached 18.83 million tons, an increase of 6.7 percent compared with the same period last year.

Regarding imports, besides the low-cost steel from China, HRC from India has also arrived in large quantities with the selling price of $15-20 per ton lower than domestically made products.


The selling prices have experienced several adjustments this year and have decreased by 8-10 percent. As a result, many enterprises have to reconsider their plans to expand mills. Most of them have adjusted their production plans to reduce inventory.

Even Thep Viet, a big manufacturer, said its production has increased very slightly compared with the same period last year.

“Domestic consumption has decreased, and it is difficult to boost exports because of the protection barriers,” Thai said.

According to Nghiem Xuan Da, chair of VSA, oversupply may increase in the time to come, especially galvanized steel, cold rolled steel, steel pipe and structural steel.

Da said Vietnam has opened the market widely, which makes other countries feel that Vietnam has no measures to protect domestic production.

Not only China, but other countries are also rushing to sell their steel products in Vietnam. Meanwhile, domestic demand hasn't increased. This has worsened the oversupply.

“Manufacturers’ profits have been seriously affected. It is very difficult to export products because the importing countries such as the US and Eastern European countries are strengthening measures to protect their domestic markets,” Da said.

According to the Ministry of Industry and Trade (MOIT), steel products often face trade remedy lawsuits. As many as 35 out of 142 lawsuits raised by importing countries are related to trade products.

Linh Ha

 

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