Some steel makers in Vietnam had to slash prices three times in May and accept losses, while others did not make any price changes in the month, which is likely to result in unhealthy competition.
Steel makers and traders in Vietnam are finding it hard to seek consumption markets because the real estate market is frozen. For the time being, there is no other way but await the stimulus package worth VND30 trillion (US$1.44 billion) for the real estate market. Although there is no high hope, the steel industry expects to escape from the bog where it has been stuck for too long.
Mr Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA), said the steel industry sold about 400,000 tonnes in May, equivalent to that in April, while inventory grew from 320,000 tonnes to 350,000 tonnes, lower than a monthly selling volume - not a worrying volume. As demand shrinks, steel makers have to scale down their operations.
Slow sales have forced many companies to reduce selling prices to compete. Some steel makers had to slash prices three times in May alone and accepted losses, while others did not make any price changes in the month. This is likely to result in unhealthy competition.
To prevent this, VSA has invited its members to a meeting to work out fundamental business practices to avoid unfair competition.
Currently, input costs for steel production do not decrease, while prices of some items are on the rise, thus pushing up steel production costs. Therefore, steel makers should not sell at least on breakeven, not at a loss, because they will hardly exist in this prolonged declining market.
Besides, to ensure sustainable production and employment for workers, they have to reduce costs to maximum and bring down inventories. Hence, they have to weigh up the market demand for production plans.
While the gloomy market demand is wrecking on domestic steelmakers, some companies like Hoa Sen Steel and Pomina Steel still have positive business performances because they have good export markets.
According to VSA, steel makers need to update information and have defensive measures for their products to survive and develop.
Vietnamese
