Steel industry to see tougher competition with newcomers

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Five new steel mills with a combined capacity of 1.5 million tons per year will start operations this year, making supply further exceed demand and leading to a fiercer competition in the local steel market. The steel mills of Thai Trung Steel Co. in Thai Nguyen, An Hung Tuong Steel Co. in Binh Duong, Middle Region Steel Co., Pacific Steel Co. and Dana-Italy Steel Co. in Danang are scheduled to begin production this year. With the additional capacity of these new plants, the total steel capacity of the country will rise to 11 million tons a year. The annual steel consumption in Vietnam is now some five million tons, less than half of the production capacity of domestic steel mills, said Nguyen Tien Nghi, vice chairman of the Vietnam Steel Association (VSA). While Vietnam's steel exports are facing stronger trade defense in foreign countries, the fact that more steel plants will be put into operation this year will make the competition among local steelmakers more … [Read more...]

Steel consumption improves in first quarter of 2015

Total steel sales of members in the Vietnam Steel Association hit 2.5 million tons in the first three months of this year, an increase of 25 percent over the same period last year. Steel consumption improved as real estate market has warmed up while macro-economy shows signs of recovery. However, steel was mostly consumed domestically as steel exports merely touched 92,000 tons, up 11 percent compared to the same period last year, accounting for 8 percent of total steel sales. Economic experts said that in the future when free trade agreements are implemented widely, local steel market will suffer certain effects. Therefore, local steel producers should be ready in order to cope with them. Especially, authorities should tighten quality control on imported steel and carry out measures in order to protect domestically-made products. In addition, local producers should also improve their technology and enhance managerial skills as well as competitive ability in the context of global … [Read more...]

Steel consumption grows strongly

The Saigon Times Daily The Vietnam Steel Association (VSA) reported that its member producers sold a combined 2.5 million tons of steel in January-March, soaring 25% year-on-year. Construction steel alone accounted for 1.29 million tons, a rise of 10% against the first quarter of 2014. Notably, March steel sales totaled 651,633 tons, rising by 160% versus February in which the Vietnamese had more than a week for the Lunar New Year holiday (Tet), and growing 14% year-on-year, the local news site VnExpress reports. VSA said the building material market has rebounded after the Government adopted policies to prop up economic growth. The recovery of the realty market also buoyed the steel sector, especially construction steel. In addition, sales of steel pipes and galvanized sheets expanded 20% and 81% respectively in the first three months of this year against the same period last year. Local steel producers did not cut prices as demand for their products on the domestic market … [Read more...]

New trade pacts mean steel will see hard times

The domestic steel sector would face difficulties due to fierce competition from imported steel, and the sharply reduced taxes levied on such imports, the Ministry of Industry and Trade said. A report from the ministry's Industry and Trade Information Centre showed that when bilateral and multilateral trade pacts come into effect, the industry would be under greater pressure from countries, which will be at a greater advantage, such as the Republic of Korea, Russia and Belarus. In addition, several new production lines, including Vinakyoei, Posco SS and Formosa, would also ramp up competition in the sector. The Finance Ministry had promulgated a circular 161/2011/TT-BTC that took effect at the beginning of this year, and relates to the preferential import taxes that will be levied following the implementation of the ASEAN Agreement on Trade in Goods for 2015 to 2018 period. As per the circular, the import taxes levied on steel, iron ore and alloy imports will be zero per cent. The … [Read more...]

New trade pacts mean steel to see hard times

The domestic steel sector would face difficulties due to fierce competition from imported steel, and the sharply reduced taxes levied on such imports, the Ministry of Industry and Trade said. A report from the ministry's Industry and Trade Information Centre showed that when bilateral and multilateral trade pacts come into effect, the industry would be under greater pressure from countries, which will be at a greater advantage, such as the Republic of Korea, Russia and Belarus. In addition, several new production lines, including Vinakyoei, Posco SS and Formosa, would also ramp up competition in the sector. The Finance Ministry had promulgated a circular 161/2011/TT-BTC that took effect at the beginning of this year, and relates to the preferential import taxes that will be levied following the implementation of the ASEAN Agreement on Trade in Goods for 2015 to 2018 period. As per the circular, the import taxes levied on steel, iron ore and alloy imports will be zero per cent. The … [Read more...]

Competition seen intensifying in steel sector

An employee of a steel mill has rust-resistant paint sprayed on steel bars in stock. The VSA estimates domestic steel consumption would be six million tons this year while the combined output of operational steel mills is 11 million tons - PHOTO: MINH KHUE

Tu Hoang Vietnam will have to lower import tariffs on steel products imported from more markets as committed to bilateral and multilateral trade agreements (FTA), according to a report of the ministry’s Industrial and Commercial Information Department. Vietnam is expected to sign FTAs with South Korea and the Eurasian Economic Union comprising Belarus, Kazakhstan and Russia. South Korea and Russia have strong steel manufacturers. Last month, Korea’s Ministry of Trade, Industry and Energy said the northeast Asian country hoped the FTA with Vietnam would be officially signed in the first half of this year and come in force by the end of the year, raising hopes for two-day trade to triple to US$70 billion by 2020. Once the trade pact comes into force, Vietnam will further open its market to Korea’s industrial products including iron and steel items and liberalize 89.75% of tariff lines for Korea’s imports, while that country’s proportion for Vietnam … [Read more...]

Cement consumption up, steel down

According to the Building Materials Department under the Ministry of Construction, consumption of cement in the first two months of this year reached 9.01 million tons, accounting for 103.9 percent of the same period last year and 12.5 percent of this year’s plan. Cement consumption posted fairly high growth compared to the same period last year amid steady industrial manufacturing and domestic rising demand. In order to balance supply and demand, Prime Minister Nguyen Tan Dung recently agreed to eliminate five cement plants whose capacity is below 2,500 tons of clinker per day from the planning and delay 9 cement projects to after this year. It is expected that there will be only one cement production line to be put into operation this year so as to narrow the gap between supply and demand. Meanwhile, the Vietnam Steel Association (VSA) said that steel consumption merely touched 300,000 tons in the first two months of this year, down 30.3 percent over the same period last … [Read more...]

Industrial producers fret over power price hike, starting March 16

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Electricity price hike will deal a big blow to the steel industry. File photo Industry is worried about both the upcoming power price hike and the knock-on effect it is likely to have on their other inputs. The government recently decided to increase electricity prices by 7.5 percent with effect from March 16 to VND1,622 (7.7 US cents) per kWh. Major consumers like steel, cement and pulp manufacturers are among those likely to be most affected by the hike. For instance, power accounts for some 7 percent of production costs for steel enterprises. Steel plants use 400-600 kWh for the production of a ton of steel billet, according to the Vietnam Steel Association (VSA). "Electricity price hike will deal a big blow to the steel industry," former chairman of the VSA Pham Chi Cuong said. "Prices of steel imported from Japan and China are lower than locally produced steel. A power hike will make it even harder for Vietnamese companies to stay competitive. "The power price hike … [Read more...]

VN businesses brace for new hike in electricity prices

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VietNamNet Bridge - The 7.5 percent price increase in electricity prices, starting from March 16, will cost small businesses hundreds of millions of dong and big businesses billions of dong a month. Nguyen Xuan Duong, chair of the Hung Yen Garment JSC, said the hike would lead to a 1 percent increase in the production cost and could have a negative impact on production. "We will not only suffer from the price increase, but also price increases of other goods and services caused by the new electricity hike," he said. Duong said he was considering raising salaries for his workers, who have to spend more money on household electricity, in order to retain them. Ta Van Cau from Cau Ly food processing private enterprise in Hanoi said he has to pay VND10 million a month on average on his small production workshop alone. "With the price increase, I would have to pay hundreds of thousands of dong a month more, which is really a burden on a household-run business like ours," he … [Read more...]

Businesses exploring ways to bear power tariff hike

Workers at a compact lamp production line of Rang Dong Thermos Light Bulb Joint Stock Company. Using energy-saving equipment like compact lamp is one among measures taken by businesses to cope with electricity price hike. — Photo ttxvn

HA NOI (Biz Hub) — Restructuring production processes and raising workers' awareness about saving energy are some of the measures that businesses are following to adapt to the new electricity price hike. Under a decision approved by Prime Minister Nguyen Tan Dung last week, electricity prices have been raised 7.5 per cent to an average of VND1,622.05 per kilowatt-hour (kWh) from March 16. Nguyen Anh Tuan, Director General of the Ministry of Industry and Trade's Electricity Regulatory Authority, said the hike will translate into an additional VND4,800 ($0.22) for each household consuming 50 kWh of power a month, while those using 100 kWh a month will have to pay about VND9,800 ($0.46) more. Since the price rise will hurt low-income and disadvantaged families, State financial support for the electricity bills of these households will be increased by VND153 billion ($7.28 million) a year from the current VND1 trillion ($47.61 million), he added. The price augmentation, however, … [Read more...]

Cost cut sought for Guang Lian steel project

Hung Le A source at the Dung Quat Economic Zone Authority in Quang Ngai Province, the site of the project, confirmed the information with the Daily last week. E-United’s fifth request to adjust the project has been sent to relevant ministries and agencies. While JFE was still involved in the project, permission was sought to increase the investment cost from US$3 billion to US$4.5 billion to make the project economically efficient. However, JFE decided to withdraw from the project last September. According to the source, together with the proposed investment cost cut, E-United wants to switch from making technical steel for the mechanical engineering sector to steel sheets since it would help cut investment capital. The source added if the investor gets the nod to lower investment capital, government agencies would require the investor to have a clear road map for execution of the project and show loan contracts. When JFE announced its pullout, industry observers said … [Read more...]

Power price hike to raise 2015 CPI by 0.23 percent

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Workers maintain power facilities (Photo: VNA) The 7.5 percent increase in electricity prices from March 16 is forecast to raise this year’s consumer price index (CPI) by 0.23 percent, said Nguyen Anh Tuan, Director General of the Ministry of Industry and Trade’s Electricity Regulatory Authority. The hike will translate into an additional 4,800 VND (0.22 USD) for each household consuming 50 kWh of power a month, while those using 100 kWh a month will pay about 9,800 VND (0.46 USD) more, he said. Tuan added since the price rise will affect low-income and disadvantaged families, State financial support for the electricity bills of these households will be increased by 153 billion VND (7.28 million USD) a year from the current 1 trillion VND (47.61 million USD). A survey by Vietnam News Agency reporters shows that the price augmentation will have its largest impact on big power-consuming industries. Truong Quoc Huy, General Director of the Vicem But Son Cement Joint … [Read more...]

Businesses concern about electricity price increase

Steel companies are much affected from the electricity price increase that will start on March 16 (Photo: SGGP)

According to the Ministry of Industry and Trade, the electricity price increase of 7.5 percent from March 16 will push up production costs at businesses by 0.2-0.8 percent. However, many companies said the ministry’s calculation should comprise the hike in production costs of materials for their production. Those that will be most affected from the electricity price hike are from steel, cement, paper industries and material producers. According to Vietnam Steel Association, electricity accounts for 7 percent in production costs of a ton of steel billet, which consume an average of 400-600 kWh of electricity. A ton of steel needs 70-80 percent steel billets. As a result, the electricity price increase will directly impact steel production costs and the product price will be forced to surge in the time ahead. Mr. Le Quang Hung, director general of Saigon Garment Manufacturing Trading Joint Stock Company, said that electricity price hike will directly affect the enterprise's … [Read more...]

Steel industry seeks more Gov’t help

The Vietnam 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 Vietnam 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 … [Read more...]

Steel oversupply sparks competition

Van Nam The local demand for construction steel this year is estimated at six million tons but the combined output of steel mills nationwide could be 11 million tons, the Ministry of Industry and Trade forecast in a recent report on the sector. Not only construction steel, there is an oversupply of other steel products such as ingots, galvanized sheets and color-coated sheets as their supplies are 1.5-2 times higher than needed. For example, steel ingot output is calculated at 10 million tons a year while domestic demand for the product is only 5.5 million tons. The annual output of galvanized and color-coated steel sheets is 2.5 million tons but demand is only 1.3 million tons a year. Pham Chi Cuong, former chairman of the Vietnam Steel Association (VSA), told the Daily on January 12 that previously local authorities were competing with one another in licensing steel projects without caring about the master development plan for the steel sector. "Back to the time when I was … [Read more...]

Excess capacity clouds the outlook for steel sector in 2015

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(VOV) - Integration and growth are the new buzzwords for the steel sector in Vietnam as business enterprises look at global markets not just to sell steel, but also to acquire the raw materials to fuel further expansion. In 2014, the steel sector obtained a growth rate of 12% thanks to active support from the Government and great effort by enterprises within the sector. Steel output jumped 10-15% to hit an all time record high of 12 million tonnes in 2014, meeting both domestic demand and exports, according to statistics from the Ministry of Industry and Trade. Welded steel pipes had a particularly strong year. In spite of a US anti-dumping lawsuit on welded steel pipes and welded stainless steel pressure pipes, enterprises throughout the sector report higher growth compared to previous year. Welded steel pipe output shot up 40% on-year to hit 1.3 million tonnes, 1.1-1.2 million almost all of which had been consumed by year’s end. The favourable results have been attributed … [Read more...]

Breakfast @ Tuoi Tre News – January 3

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Tuoi Tre News briefs you on some of the leading stories published today, January 3, in Vietnamese media.Society -- A large fire broke out at Ba Don Market in the central province of Quang Binh on early Friday morning. The blaze caused no casualties but burned down 24 stalls of 18 traders, causing a total damage of VND50 billion (US$2.33 million). The fire may have been caused by a short circuit or carelessly burning incense, authorities said. -- Vietnamese rescuers have saved one sailor and found the bodies of two others who were among the 19 crewmembers of the Bahama-flagged cargo ship Bulk Jupiter that sank off the coastal southern Vietnamese city of Vung Tau on Friday morning while on the way from Malaysia to China, the Vietnam Maritime Search and Rescue Coordination Center reported on Friday. Rescue efforts to search for the 16 remaining sailors are underway. -- An earth quake measuring 2.8 on the Richter scale rocked Bac Tra My District in the central province of Quang Nam … [Read more...]

Officials downplay concerns foreign goods will flood market

(VOV) -The ASEAN Trade in Goods Agreement (ATIGA) is a free trade and investment agreement that has provided investors with a unique set of guarantees designed to stimulate foreign direct investment and the movement of factories within the Asian region. It has increased ASEAN’s competitive edge as a production base in the world market primarily through the elimination, within ASEAN, of tariffs and non-tariff barriers. The primary mechanism for achieving such goals has been the Common Effective Preferential Tariff scheme, which established a phased schedule starting in 1992 with the goal to increase the region’s competitive advantage as a production base geared for the world market. Now with the final phase of the tariffs phase-out set for January 1, 2015 many are having buyer’s remorse amid last minute concerns that foreign ASEAN goods and services may flood the domestic market, leading to a glut and threaten the economic stability of the domestic retail … [Read more...]

Fiercer competition looms in steel sector next year

An employee of a steel mill checks construction steel at a storage facility in this file photo. More steel imports will pile pressure on local steel producers - PHOTO: MINH KHUE

Van Nam Pressure from Russia Thep Viet Steel Corporation’s general director Do Duy Thai said Russia’s huge amount of imported steel will flood the local market if the import tariffs imposed on Russian steel are lowered in the coming time. Thai shared his concern with the Daily after representatives of Vietnam and the Customs Union of Belarus, Kazakhstan and Russia signed a joint statement on conclusion of negotiations over a free trade agreement (FTA) between these countries. This trade pact is expected to be signed next year. Thai forecast that Russia’s steel imports would surge and gain a competitive edge in Vietnam as Russia is a steel giant of the world with its output ranked fifth globally (over 70 million tons annually), and strong in low production cost, abundant material supplies and advanced technology. Ho Nghia Dung, chairman of the Vietnam Steel Association (VSA), said Russia has in the past years exported to Vietnam the steel products which … [Read more...]

Steel imports surpass US$6 billion

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(VOV) - Vietnam has imported 9.9 million tonnes of steel valued at US$6.6 billion during the 11 months leading up to December, according to the latest statistics from the Ministry of Industry and Trade. For the month of November alone the country imported 1.1 million tonnes of steel worth US$728 million, with Chinese steel accounting for half of the import volume. In the 11 months period, domestic steel production has been estimated at US$2.7 million tonnes, a year-on-year rise of 1.8%. Around 4.73 million tonnes were sold in the domestic market while 378,500 tonnes have been stockpiled, up 27% against the same period last year. … [Read more...]