Cost of construction of steel in Vietnam is expected to rise in November, sparked by rising costs of ingot steel worldwide.
With price hikes of ingot steel in global market, steel costs utilized for domestic construction are likely to rise in November, as per VSA (Vietnam Steel Association).
Steel ingot costs have witnessed increase between US$ 15-20 per Ton, as demand outpaces supply, making local rolled steel prices range between US$ 3-6 per Ton.
Rolled steel is fetching US$ 477-487 per Ton in Northern Vietnam and US$ 493-508 per Ton in Southern Vietnam.
Vietnam is currently importing nearly all of the steel ingots for steel production among domestic producers. With 60% of ingots imported from China, local producers are worried while ingot costs remain high, processed steel makers of China are capable of providing lower costs for processed steel that has flooded the domestic market for past few months.
Moreover, China will now impose 10% tax on ingots, which is worrying domestic steel producers. Higher import taxes means higher price of steel ingots that will increase finished steel costs.
"Though domestic steel makers are looking to increase steel costs but are still unable to determine the rate by which prices will be increased. They know that the market will not accept overly priced steel," said an analyst at RNCOS.
As per VSA, over first ten months in 2006, Vietnam steel industry has produced around 1.4 Million Ton of steel ingots, meeting just 30% of local demand. While industry considered the use of scrap steel as alternative to ingot, statistics show that just 0.4 Million Ton of scrap steel was imported in 2006. Additional 0.3 Million Ton of imports is required to meet steel consumption demand in 2006.
Consumption of scrap steel is predicted to rise in 2007 to more than 1.5 Million Ton, mainly because of ingot steel refineries, which are soon coming on-line in Vietnam.
VSA has urged its member organizations to raise ingot steel output as early as possible. VSA aims to expand by 10.5-11% in 2006, with an industrial output value of around US$ 397 Million.
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