Vietnam News Network

Currently, VSC is selling coiled steel at 10.8 million dong per ton and bar steel at 11.39 million dong. As such, within just 30 days, the steel price has decreased by 600,000-700,000 dong per ton.

Analysts said that the massive flow of foreign-made steel, especially from ASEAN countries like Malaysia, Thailand and Indonesia since June-July has forced VSC and other domestic steel producers to lower prices.

The ASEAN countries have taken full advantages of tax reductions under the AFTA framework and have boosted steel exports to Vietnam.  ASEAN-made products are now 700,000-900,000 dong per ton cheaper than domestic products. These countries quickly ousted China to become the main steel exporter to Vietnam, making up 74 percent of total exports.

This has been described as an impressive “throne usurpation.” China remained the biggest exporter to Vietnam in 2008, selling 64.5 percent of total exports to Vietnam, while ASEAN countries accounted for just 11.7 percent.

Vietnam is also an AFTA member, but cannot take full advantage of tax reductions to boost exports. Meanwhile, its producers are inferior to foreign producers and losing a big market share to ASEAN steel producers

Domestic producers once dominated the coil steel market (this kind of steel products accounts for 25-30 percent of the construction steel market). Deputy Chairman of the Vietnam Steel Association Nguyen Tien Nghi has reported that Vietnamese producers now have only 20 percent of the market share, because the other 5-10 percent has fallen into the hands of ASEAN countries.

Domestic producers, even with prices lowered by 700,000 dong per ton, still cannot meet market expectations.

VSA claimed that ASEAN countries have been trying to export steel to clear out the over-abundance of steel in their countries caused by the global crisis.

Vietnam’s steel producers also have an excess. Nghi from VSA said that the total output is seven million tons, while the total demand is just 4.5 million ton.

In order to rescue domestic producers, the Ministry of Finance in March 2009 raised the import tariff from 12 to 15 percent. This has helped domestic producers “live well” since April. However, the state cannot help businesses more if they cannot compete.

Purchasing power in the market remains weak, because people still hope steel prices may decrease further.

Nguyen Van Xuan, who plans to build a villa in Hoang Mai district, said that he has delayed the project to wait for news. He hopes the price will decrease further by 200,000-300,000 dong per ton.

Owners of construction shops also said that steel sales have been slow, with more visitors than buyers.