Despite a rise in prices of steel ingot, an increase was observed in the production and consumption of steel in H1 2008 in Vietnam.
The Ministry of Industry and Trade revealed that in spite of a rise in prices of steel ingot, an increase was witnessed in production and consumption of steel from January to June 2008, as VietnamBusinessFinance reported.
About 1.96 Million Tons of steel was produced, while nearly 1.83 Million Tons was sold in the first half of the year, a YOY rise of around 6.7% and 8.2% respectively. However, prices of ingot steel reached US$ 1,000-1,150 from US$ 760-780 per Ton from January to June 2008.
Expanding economic growth and high FDI are some of the key factors that resulted in a rise in steel output of the country during H1 2008. Also, creation of better business environment by the government for promoting investment and cooperation with global steel corporations are boosting the market to encourage more and more enterprises to supply ingot steel.
Moreover, consumption of steel improved in the country as both the Vietnam Steel Association and the Steel Corporation joined forces with steel production businesses to provide adequate supply of steel in the market without rise in steel prices. Presently, ingot steel production in Vietnam is much cheaper as compared to other countries and thus, led to a rise in steel consumption during H1 2008.
However, due to surging production cost, steel prices are expected to increase by the end of the year. Also, rise in steel prices is unavoidable as prices of ingot steel are increasing at a fast pace. But due to low spending power in rainy season, the steel prices are going to rise gradually.
A Research Analyst at RNCOS said, “With the rise in prices of steel, the development policy of Vietnam for steel industry should be focused on current projects such as Vietnam-China project and Thai Nguyen Steel project to produce ingot steel from ores. Also, to reduce the cost of production, it is essential to expand production of ingot in Vietnam. Thus, Vietnam’s private companies should concentrate on several projects to increase ingot production in the country to trim down the dependence on imports.”
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