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Vietnam steel production outstrips demand by a wide margin   2009-09-22 - Tuoi Tre

Steel products are loaded onto a struck at the Phu My Steel Factory  
Steel sales in Vietnam are set to rise 20 percent to 4.6 million tons this year but the new plants starting up in the final quarter will boost the country’s 2009 output to 7 million tons, an industry association said.


The newcomers include Hoa Phat’s steel-rolling mill in Hai Duong Province and Thang Loi Vietnam Steel Company in Thai Binh Province, both in the north.

“We can easily anticipate a surplus of more than 2.4 million tons,” said Nguyen Tien Nghi, vice chairman of the Vietnam Steel Association.

Sales of construction steel, known as long products, rose 23 percent in the 12 months to the end of August to 2.7 million metric tons, according to figures supplied by the VSA’s 75 member companies, which account for 85 percent of Vietnam’s steel makers.

Of the 4.6 million tons of steel sold this year, VSA members will supply four million tons, Nghi said.

VSA chairman Pham Chi Cuong said steel producers were trying to boost exports to reduce the surplus but were facing tough competition from Thailand and China.

The main export markets for Vietnamese steel are Cambodia and Laos.

A sales manager who wished to go unnamed said his company’s sales to Cambodia in the first half were barely 50 percent of the year-ago figure.

He said Thai, Chinese and Indonesian steel companies were selling their products to this market for only US$440-460 per ton, or $100 below what his company could offer.

Do Duy Thai, general director of Pomina, said his company would probably ship US$28 million worth of steel products to Cambodia in 2009, the same as last year.

Despite having surplus stocks, Thai said, Vietnam’s steel makers would not be cutting prices much as they had to import their materials from abroad.

He said they would have no choice but to cut production.

VSA chairman Cuong said prospective investors and government agencies had been warned of the rising surplus yet many enterprises still wanted to put money into the steel industry.

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