Vietnam’s steel sector is pumping up prices to meet increasing input costs due to unstable rising forex rate.
Recently, local steel prices have risen by VND 200,000-300,000 ($10-$15) per tonne to VND14
million ($700) per tonne. This is because Vietnamese steel firms have to import a large amount of billets – the raw material to produce wire rods and deformed bars, and suffer forex rate risks.
According to the General Statistics Office (GSO), the US dollar price index in October was up to 0.6 per cent against last month and 8.37 per cent against 2009’s corresponding period.
Do Duy Thai, chairman of Thep Viet Steel Corporation’s board, told VIR that local steel firms lost an average of VND600,000 ($30) per tonne based on the present exchange rate.
“The US dollar’s increase against the Vietnamese dong has seriously impacted on local steel makers”, he said.
According to the Vietnam Steel Association (VSA), steel prices would increase during the remaining months but not strongly fluctuate due to an oversupply of products.
“The present billet price jumped to $580-$585 per tonne up $10 per tonne against the beginning of October. To offset losses, steel firms have had to add VND600,000 (30$)-VND700,000($35) per tonne but an oversupply and price competition with import products are major challenges to local steel makers to raise their products’ prices,” said VSA chairman Pham Chi Cuong.
VSA member firms produced 443,685 tonnes in October, up 9.18 per cent against September 2010 and 25 per cent against 2009’s corresponding period. Particularly, these firms sold 448,293 tonnes in October, up 57.95 per cent against December 2010 and 56.22 per cent year-on-year.
.Thep Viet Steel Company only sold 70 per cent total production capacity, about 750,000 – 1,1 million steel tonnes due to a flooded market.
According to VSA, total steel inventory and billet reserves of VSA member companies were 322,872 tonnes and 550,000 tonnes respectively until October 31, 2010.
“Moreover, the pressure of imported steel from some ASEAN countries such as Malaysia, Thailand has been affecting steel prices in the domestic market,” said Cuong.