Work starts on US$620 million steel plant in Vung Tau
By Van Nam - The Saigon Times Daily
HCMC – Posco SS Vina on Wednesday broke ground for a new steel factory with an annual capacity of one million tons in Phu My 1 Industrial Park in Tan Thanh District, Ba Ria-Vung Tau Province.
The new plant is expected to provide one million tons of steel ingots annually which will be produced into 700,000 tons of steel structures and 300,000 tons of construction steel per year. Costing some US$620 million in total investment capital, the plant will be put into operation in the next three years.
Demands for steel structures of Posco in the local market are still low, chairman of the Vietnam Steel Association (VSA) Pham Chi Cuong told the Daily at the groundbreaking ceremony of the steel mill.
However, Cuong noted local demands for such high quality steel products would get bigger thanks to the development of traffic infrastructure and heavy industries and mechanics sectors at home in the future.
According to Cuong, all construction steel mills in the country annually turn out a combined 10 million tons of steel to the market in comparison with domestic demands of only five to six million tons a year. With an additional 300,000 tons which will be produced by Posco’s new steel plant in 2015, the total output of the steel industry will far exceed the demand, Cuong asserted.
Speaking to the Daily, VSA vice chairman Do Duy Thai said local appetites for construction steel this year have sharply plunged, especially in May and June. The construction steel consumption volume dropped nearly 10% year-on-year to a mere two million tons in the January-May period.
Many steel makers are struggling to survive tough times, with only half of their total capacity maintained as observed by Thai. Six companies in the industry have had no choice but to transfer their premises to other firms due to hefty losses and debts.
Thai forecast a dark outlook for local steel makers in the year’s second half given the stagnant realty market, with several property project owners unable to carry out their schemes on schedule. Besides, Thai said steel exports of the country will continue facing difficulties in the coming months.