According to the Development Plan of Vietnam Steel Industry in 2007-2015 approved by Prime Minister, there should be norms for projects of steel plants such as the number of projects as well as the output capacity. However, though there is an oversupply of steel, many investors still seek to implement steel projects.
According to Vietnam Steel Association (VSA), steel consumption in Quarter I 2012 was only 1.144 million tonnes, down by 12 percent year on year. If the steel market continues to be grey, reaching the target of growth rate of 4 percent in 2012 will be unlikely.
Struggling for survival
It was said by Mr Pham Chi Cuong, Director of VSA, the policy of tightening public investment has put quite hard pressure on the steel industry. There is an oversupply of 4 key steel products including construction steel, galvanized steel, pipe steel and cold rolled steel.
Explaining the grey picture of the steel industry, Mr Cuong added that five steel makers in the North have ceased production for 2 months. Some, though apparently dead, have not declared bankruptcy. Because of huge investment in their production lines, 60 big steelmakers had to struggle for survival despite difficulties.
For example, the brand Pomihoa of Tam Diep Steel Limited Company will no longer exist in the coming time after 12 years of presence in the market. After its recent successful M&A, Kyoei Steel Firm (Japan) has become the owner of 70 percent capital and been changed into Kyoei Vietnam Steel Company, starting to operate from March 10 this year. With this change, Pomihoa brand only remains on some of its unsold products.
The representative from Vietnam Steel Corporation – POSCO Steel Corporation (VPS) said that, since late 2011, it has always operated under its capacity. For example, with steel pipe product, the current production is about 1.8-1.9 million tonnes per year, in which nearly 1 million tonnes are for domestic sales and the rest is for export. Galvanized steel has its production of nearly 2 million tonnes but only consumption of 1.1-1.2 million tonnes.
Reasons
Steel makers explain that high interest rate and weaker demand in the domestic market have caused the hardship. However, economic experts have a different explanation that the cause may come from steel makers. They make unfocused investment and carry out unplanned projects without studying the market. Supply has far exceeded demand. Therefore, even without the economic depression, the steel industry couldn’t escape hardship. In the coming years, the industry will face more and more challenges and difficulties, stated experts.
At present, there are over 460 steel makers. Both the number of steel enterprises and the whole industry’s production have been galloping for years. The capacity of only 3 products (long steel, pipe steel and flat steel) is over 16 million tonnes per year. Concerning construction steel, the supply reaches 9 million tonnes while the expected maximum consumption is only 6 million tonnes, which makes 30 percent of products redundant. However, it is strange in the sector of construction steel, in spite of oversupply, there are now five steel plants going to be put into operation.
T.T
Vietnamese
