Chinese steel imports should be clearly trademarked and follow strict Vietnamese quality standards before being allowed for sale in the domestic market, to stop Vietnam becoming a dumping ground for oversupplied steel products from this neighboring country.
Vietnam Investment Review (VIR) quoted the warning from Vietnam Steel Corp. (VSC) general director Dau Van Hung at the nation’s steel sector review meeting last week
Hung said “We see that China, the world’s largest steel producer with annual supply of 400 million tons, is building the nation as a concentrated steel manufacturing hub and targeting other countries as its consumption markets.”
He explained that the Chinese government was currently posing strict trade barriers on overseas shipments of raw materials needed for steel production including billets and cokes, while providing incentives such as favorable credit schemes and tax breaks for exporting finished steel products including wire rods and deformed bars.
Such incentives are designed partly to make Chinese steel cheaper than domestically-manufactured products, as domestic producers are raising prices to offset increasing production costs, Hung added.
VSC figures indicate that prices of domestically-produced construction steel, comprising wire rods and deformed bars, in 2006 made a 5 per cent increase from 2005 to stay between VND7.7 million ($481.25) and VND7.85 million ($490.6) per ton.
At the same time, Chinese-made wire rods and deformed bars was reported to be sold at an average price of $60 per ton lower than domestic products.
Difficulties still lie ahead because production costs of VSC members are forecast to rise by $25 million to cover increased prices of electricity and other raw materials used for steel production, he said, adding that VSC planned to enjoy a 7.5 per cent increase to $784.4 million in annual revenues for this year.
Along with price rivalry, Vietnam Steel Association (VSA) said the massive influx of Chinese steel into Vietnam would also force domestic construction steel makers to scale down their production capacity, which is currently almost double the domestic demand of 3.4 million tons per year.
“With Vietnam’s WTO membership, we are ready to claim China is dumping its steel products in Vietnam if we can fully collect supporting data for the case. Additionally, Vietnam should learn lessons from other regional countries when applying suitable protection tools in line with WTO rules in order to maintain healthy development of the nation’s steel sector,” said a VSA representative.
The representative said the completed development and commenced construction of 10 new steel factories scheduled for 2007 would help to offset the country’s reliance on foreign products and result in improved competitiveness of Vietnam steel producers.
Among those, projects to mine iron ores of Thach Khe and Quy Xa deposits are a priority. (VIR)
Vietnamese
