Steel Stockpile Mounts

As the demand for steel has slumped, the stockpile has grown to some 600,000 tonnes - the largest ever in Vietnam to date. This is sending many steelmakers into hardship.

 

Mr Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA), said the slowing sales are resulted from impacts of tightened investment policy and shrinking real estate market, particularly in April, May and June. Many steel producers are in distress because of growing stockpile and slowing sales. Currently, most steel mills are running at some 60 percent of capacity. In the year to date, steelmakers have lowered selling prices three times but the sales are still going slow. In May alone, construction steel sales dropped 11.37 percent from April to 389,712 tonnes. Meanwhile, borrowing costs are on the rise and steel companies have to pay VND300,000 - 400,000 for each tonne in stockpile.

 

The VSA said steel prices in August and the last months of 2011 will go down further. Currently, steel prices are hovering at VND15.6 - 16.8 million per tonne.