Steel Industry Plan “Breaks down”

Many enterprises are planning to increase export while others are still building more plants.

 

According to the statistic figures, there are 462 steel makers, with overall capacity of 2.13 million of tonnes of pig iron per year, 7.54 million of tonnes of steel, 10.875 million of tonnes of long steel, 3.35 million of tonnes of flat steel, 2.188 million of tonnes of rolled steel, 2.487 million of tonnes of galvanized steel, six time higher compared to 2000. The output of all factories has reached about 9 million tonnes per year, whereas total demand in 2012 is expected to be approximately 6 million tonnes. Furthermore, cold-rolled steel production will be about 3.6 million of tonnes, but demand only accounts for 1.7 million of tonnes per year.

 

As the result of frozen real estate market, domestic construction market also shares the same situation, pushing the steel industry in difficult situation of decreasing demand. Otherwise, regarding the report of the Ministry of Industry and Trade, steel export market of Viet Nam has also been diminished, consequently from the fragile of global economy, many countries implemented tightened economic policies, cutting down public investment and lowering public debt.

 

With unmethodical investments, many steel enterprises have to suffer from their own made burdens. Besides global downturn, many steel enterprises do not concentrate on the equilibrium; excessive supply over demand will certainly cause pressure on the supply . However, the fundamental for a long-term and healthy development of domestic steel industry still doest not exist. Enterprises are in stuck with operation processes from input, producing and consuming. The competition in price is still continuously influenced when the relation among cost and price do not become reasonable.

 

According to Dr Ho Le Nghia - Deputy Director of the Industrial Policy and Strategy Institute (Ministry of Industry and Trade), Viet Nam steel industry should be more practical in development process. Viet Nam steel products will be hard to compete with foreign ones in the international markets, and domestic market will also be in the same situation with limited ability of domestic enterprises.

 

Specifically, steel industry still faces some troubles in “soft” scheme for development. In other industries, the scheme can be adjusted in necessity, but for steel industry general scheme, it can not timely adjusted because of the over-time changes in provincial steel industry scheme. As shown by some statistic figures, there are currently 32 projects, which are out-of-scheme, certificated by provinces. It seems a core reason of the recently steel industry crisis.

 

Regarding to Dr Ho Le Nghia’s analysis, massive handouts of steel production certificates will lead to a technological destruction. During the time, disused and out of date technology was imported from China by Vietnamese enterprises. To what extend, the destruction of social-economic structure will directly affect the domestic supply - demand relation as well as export market. Some countries had already implemented this strategy before there were still no commitments in the integration process.

 

Thus, it is time to review the steel industry development in a large scale for building a more reasonable development scheme, satisfying timely and adequately quantity as well types of steel products for the economy, ensuring market stability, preventing the shortage of steel products, improving quality of steel products for export aiming to regain foreign currency. Additionally, Dr Ho Le Nghia also mentioned that Viet Nam needs to carry out the “hard” scheme for production system, capital investment, efficiency, scale, market as well as distribution methods for each specific products, such as: pig iron, sponge iron, billets, steel products ...