Vietnam News Network

The domestic steel market has confounded insiders who believed that prices would remain unchanged in August and only start to increase in September.

Laminating steel at Luu Xa Steel Company, a subsidiary of Thai Nguyen Iron and Steel Corporation. The domestic steel market has confounded insiders who believed that prices would remain unchanged in August and only start to increase in September. (Photo: VNS)

The prices of steel ingots on the world market in the first half of August also rose in value. Steel ingots rose to $620-650 per tonne, a $50-60 increase. This was the primary reason behind increased domestic steel prices, said the Viet Nam Steel Association (VSA).

The Viet Nam dong also saw a two per cent devaluation against the US dollar in the previous month.

In August, domestic steel consumption increased. The country used 460,000 tonnes of steel, about 350 tonnes more than expected.

Steel prices have remained static so far this month, confounding expert predictions. Almost all manufacturers have retained their August prices, with some even increasing commissions to their agents.

Pig iron dropped to only $600 per tonne and that was a reason for the fall in steel prices, said VSA’s deputy chairman Nguyen Tien Nghi. While steel prices have not kept in line with predictions, consumers were also paying more as they often would be buying steel from stores or agents rather than directly from producers.

A report from the Viet Nam Steel Corporation said that steel prices at agents were about VND80,000 per tonne higher than direct from producers.

VNSteel explained that only 70 per cent of its steel has been directly sent to consumers. The other 30 per cent was sold by agents and stores.

VNSteel’s products account for about 56 per cent of the total steel volume on the market so that it was difficult for them to control prices and its influence on market prices was weak.

Vu Huy Hoang, Minister of Industry and Trade attributed the higher prices to weak distribution.

Prices of many products including steel had changed before they had been delivered to consumers because the distribution system was not strong enough, he affirmed.

To avoid this situation, Hoang suggested the corporation ensure sufficient supplies to the market.

The corporation also needed to co-operate with market watch forces and departments of industry and trade in provinces to control steel prices, he said.

He add that before changing the price, the corporation needed to explain the reasons to the Ministry of Industry and Trade and the Ministry of Finance.