Economic uncertainties make steel association worried

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Báo Tuổi Trẻ English - 42 month(s) ago 5 readings

The Vietnam Steel Association (VSA) is worried that uncertainties in the national economy would deeply hurt the local steel industry despite agreeable growth.

Photo: Reuters

Speaking at a seminar in Hanoi last Friday, VSA vice chairman Dinh Huy Tam said steel consumption would decline compared to last year. The sector earlier targeted a growth rate of 8-10 percent in 2011.

“We can affirm that the target is unachievable and the figure may even decrease against last year,” Tam said.

Tam attributed the gloomy forecast to concerns on shrinking foreign direct investment (FDI) capital disbursement while the real estate market has been frozen for a long time.

According to the Ministry of Planning and Investment, FDI disbursement in the first half of 2011 was US$5.3 billion, or a slight fall of 2 percent year on year. Worse yet, the figure is on the downtrend, falling from US$1.4 billion in March to US$1 billon in April, US$900 million in May and US$750 million in June.

Tam also pointed out the challenges facing large steel projects in the country. The US$4.5 billion Tycoon-E.United ISM steel mill project in Dung Quat, Quang Ngai Province is facing financial difficulties after the government approved it in May. “We are worried the project will be mired in unpredictable delays,” Tam said.

Meanwhile, the government has withdrawn the investment license of a steel project in Ninh Thuan Province as investors Lion Group and Vinashin have failed to push it forwards. Meanwhile, the US$7.5-billion Formosa steel project in Ha Tinh Province is in still its first steps of site clearance after being licensed for several years.

Last year, the local steel sector fetched $1 billion in export value while it spent up to $7 billion on imports of both materials and finished products.

In fact, the sector still posted growth in the first half of 2011. According to VSA, construction steel consumption reached over 2.4 million tons, a 12 percent year-on-year increase while steel output was 2.6 million tons.

Consumption of steel pipe, cold rolled steel and plated iron sheet grew by 20 percent, 24 percent and 43 percent respectively.

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