In the face of soaring steel prices, the steel sector has set itself the tasks of ensuring the stable supply of steel to the local market and helping to stabilise the market and prevent the bad impact on the national economy.

Steel prices have increased sharply in the local market recently, directly affecting the progress of construction works. The Government has sent a team to inspect the real situation in some production establishments. The report of the inspection will be completed before January 20.

According to the Vietnam Steel Corporation, this year, the demand for steel consumption in the local market is expected to increase by 14-20 percent compared to the 2007 figure. Relevant agencies have encountered difficulties in controlling steel prices in the local market due to the fluctuations on the world steel market and the increase in the price of input materials.

Recently, although the basic price of steel is just more than VND12 million per tonne, consumers have to buy steel at between VND15-17 million per tonne. The price hike has been attributed to the fact that some steel traders have had to buy steel through brokers. General Director of the Vietnam Steel Corporation, Dau Van Hung said that in the future, the corporation itself will find it difficult to stabilise steel prices.

In fact, the corporation tries to sell steel at a lower price than other companies but the price keeps increasing. He emphasized that steel enterprises should be actively involved in stabilising steel prices together with the State.

Another important reason for soaring steel prices is that Vietnam can only meet 40 percent of the demand for steel ingots locally and has to import the remaining 60 percent from China. Meanwhile, the price of steel ingot is not stable and likely to increase in the near future as the Chinese Government has taken strict measures to control the export of semi-finished products and steel material. In addition, enterprises have not paid due attention to importing steel ingots from Japan, the US, the EU and Russia.

It is obvious that it is time for enterprises to reconsider the ways of importing steel ingots to avoid dependence on one market, causing price fluctuations in the local market. To meet domestic demand for steel ingots, the country should encourage and develop the production of steel ingot.

President of the Vietnam Steel Association Pham Chi Cuong said “We are facing a lot of difficulties in importing waste steel under article 43 of the Law on Environmental Protection and are thus unable to produce and provide enough ingots to the local market. He said relevant agencies should work together to find solutions for facilitating the import of waste steel for enterprises, and still ensuring the requirements of environmental protection. “We have confirmed that batches of imported waste steel did not affect the environment as they all complied with the law. Representatives from Vinacontrol, an independent asset appraisal agency, also made the same conclusion after examining imported batches of waste steel recently”, he added.

According to experts in the steel sector, a tonne of steel ingot produced in the country is around US$200 cheaper than in other countries. Therefore, to reduce the price of steel in the local market, it is necessary to develop and expand the production of steel ingots. Currently, the government has created favourable conditions for enterprises to expand investment and cooperate with other steel global corporations so that the enterprises will be more active in supplying steel ingots. Deputy Minister of Industry and Trade Do Huu Hao said Vietnam’s overall plan for development of the steel sector should focus on developing a series of projects to produce ingots from ores like the Thai Nguyen Steel project, Vietnam-China project, and Thach Khe project. In addition, private enterprises should focus on some projects to produce from 300,000-500,000 tonne of ingots per year. Some major foreign-invested projects can produce 5-7 million tonne of ingots per year on average. It is expected that Vietnam will need more than 20 million tones of ingots by 2015-2020.

2008 is a pivotal year for Vietnam’s socio-economic development to pick up strongly in the 2006-2010 period. To this effect, the steel sector should focus on promoting production and controlling prices in the local market.