Vietnamese steel makers should ask themselves why Chinese steel producers can sell steel at such low prices, instead of spending time and money to pursue an anti-dumping lawsuit against Chinese producers, local experts have said, calling on the local firms to join force for increased competitiveness.
It is too early to say whether Vietnamese steel producers could win the case if they took legal action against Chinese steel makers, who have been selling steel at surprisingly low prices on Vietnam's market.
One ton of steel is being offered at US$405/ton, equivalent to VND6,480,000/ton. The retail price of VND7 million would be enough for Vietnamese importers to make fat profit.
As such, the China-sourced steel is VND1million/ton lower than the locally made product. Chinese producers can sell steel at such low prices as production cost is low.
In theory, the production cost is always low when the output is big. China produces a third of the world's total output. In 2005, China churned out 354 million tons of steel, and the figure is expected to be higher in 2006. One big steel mill in China can roll out 10-20 tons a year.
Vietnam, as a whole, can only turn out seven million tons, though its steel industry has been operating for 40 years.
In Vietnam, the Phu My plant, which has the designed capacity of 400,000 tons/ year, and Thai Nguyen, with the capacity of 300,000 tons/year, Pomina and Vietnam - Italy are the very few steel mills which are running with modern technology in Vietnam. The other steel mills all are small and using outdated technologies.
Experts believe that the small enterprises will be 'swallowed' by foreign groups when they enter the domestic market. The best solution for local enterprises is to cooperate with each other to improve their production capability. However, Vietnamese enterprises seem to be not ready for the cooperation.
A lot of investors are trying to set up ingot steel mills in the north: Hoa Phat, Dinh Vu, Hung Yen and Van Loi have the expected capacity of 200,000 tons a year, and Cuu Long 500,000 tons/year. If the enterprises 'shake hands', their output may reach 2 million tons instead of 1.3 million tons a year.
Merging and acquisition has become popular in the world; however, they remain unfamiliar in Vietnam. VietNamNet
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