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Steel consumption may fall by 14 percent this year   2008-12-11 - TBKTSG Online

The Vietnam Steel Association (VSA) said domestic steel consumption this year could be about three million tons, a drop of 500,000 tons, or 14 percent, from last year.



At the beginning of this year, VSA had set a target of selling 3.6 million tons, in addition to 600,000 tons expected to be sold by producers who are not members of the association.

In September, VSA predicted steel consumption in Vietnam may drop this year after the government asked state-owned companies to halt construction projects that were not crucial.

From August to October, steel consumption fell to about 110,000 tons a month, but last month sales surged to 320,000 tons.

The unexpectedly high steel sales last month could have been driven by speculation, not by a real strengthening of demand, said VSA Chairman Pham Chi Cuong.

It was possible that businesses were stockpiling steel in anticipation of higher demand in coming months, he added.

With many construction projects halted or delayed this year, demand for steel and selling prices have fallen, said Cuong.

Across the country, steel producers have about 500,000 tons of steel billet and 200,000 tons of finished steel products in stock they want to clear, VSA said. Steel producers said they were selling steel products under cost, at about VND11.5 million (US$677) per ton, in a bid to boost consumption.

Cuong said next year steel consumption could reach 3.5 million tons, the same as 2007, but only if the economic situation improved.

Cement consumption may also turn out to be lower than expected.

Vietnam may consume 36 million tons of cement this year, about five million less than forecast, the Viet Nam News reported Wednesday, citing the Ministry of Construction.

The ministry had previously predicted Vietnam would use 40-41 million tons of cement in 2008, a 14 percent increase on last year, according to the Vietnam News Agency.

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