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Japanese tsunami to not create price rise waves   2011-03-27 - Viet Nam Net

The earthquake and tsunami in Japan are thought to push the steel prices up, since import countries will lose a big exporter. However, experts have affirmed that it will not affect the domestic prices.


Construction companies and people have reasons to worry that the steel price will increase after the earthquake and tsunami in Japan. The historic earthquake in Kobe in 1995 once made the steel price in the world skyrocket. The flat steel price increased three fold, while structural steel by increased 2.5 times its normal price.


The earthquake and tsunami in early March has immediately influenced the steel price in the world market. The steel price, which was on the decrease, has immediately increased again. To date, Japan remains the biggest exporter to Southeast Asia, and enterprises fear that the supply from the biggest source will be interrupted due to the catastrophe.


However, experts have affirmed that there is enough reason to believe that the steel price would not increase as sharply as seen after the Kobe earthquake.


Dau Tu newspaper quoted Do Duy Thai, Chair of Pomina, a steel manufacturer, as saying that though steel prices are now at low levels, 700 dollars per ton of steel ingot and 750-800 dollars per ton of flat steel (900 dollars per ton is considered a high level), the steel price has only increased slightly.


He went on to say that the steel price is not likely to increase sharply because China, the biggest consumption market, is trying to tighten credit to curb inflation. Especially, it is trying to restrict loans to the real estate sector, thus making the demand for structural steel decrease. Meanwhile, in the Middle East, the demand for steel has also decreased due to political uncertainties.


When asked about the domestic market performance, directors of two other steel mills said the steel imported from Japan just accounts for a small proportion in the total consumption, therefore Vietnam will in no way be affected by the interrupted supply from the country.


Nguyen Ngoc Anh, General Director of SMC Investment and Trade Corporation, said that before the earthquake took place in Japan, the signs of oversupply and slow sale had appeared on the regional market already. Therefore, though the supply may go down due to the earthquake and tsunami, the price will not increase too sharply.


While the steel price in regional countries has increased, the domestic price has unexpectedly decreased since the beginning of the week, even though the construction season, from April to June, is nearing. The price of Pomina steel has decreased by 400,000 dong per ton after the price of the product increased two times last month.


The General Director of SMC said the company made good profit in the first quarter of the year thanks to the high demand on the market. However, there have been signs of sales going more slowly.


In February the stocks of domestic steel manufacturers became empty and many enterprises re-exported steel  to earn back capital,  but when the world price increased, the domestic price did not increase accordingly.


According to the Chair of Pomina, the steel mill has sold steel to sales agents, and it is now the time the sale agents sell the products on the market. He said sales have been slowing down, while steel mills hope the market would recover in April, after sales agents sell out the inventory volumes.


Representative of Hoa Sen Group (HSG) said though the world’s price has increased slightly, the domestic price is not likely to increase due to the low demand. Thai remains cautious when predicting the steel price in 2011. He said that the structural steel price is not likely to increase due to the policy on tightening credit to the real estate sector.


Nguyen Tien Nghi, Deputy Chair of the Vietnam Steel Association (VSA) also agreed that with the Resolution No 11 on curbing inflation, the demand will be low.

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