Vietnam Overseas

In 2006, Vietnam produced 6.143 million tons of steel products. In line with the growth of its construction and steel industries, the country is expected to more than double its imports of ferrous scrap to 2 million tons next year. At present, however, the country lacks the infrastructure to facilitate a large-scale ferrous import trade. The steel recycling industry is still in its infancy, with mostly small traders who pick up and sell to the larger buyers until the material eventually makes its way up the ladder to the steel mills. Adam Minter travelled around Vietnam for Recycling International and explored the current status of the country’s steel and scrap industries, as well as the opportunities and obstacles that lie ahead.

The ASEAN Iron and Steel Industry Federation will meet on April 8 to discuss ways to redress the difficulties the steel industry may face when the ASEAN-China comprehensive economic co-operation agreement takes effect on July 1.

Foundation deputy chairman Pham Chi Cuong said the steel industry in the foundation’s member countries has had high growth, but steel ingots for rolling plants were in short supply, requiring substantial steel imports every year.

No federation member state has a complex to refine steel on a large production scale and with high technology, Cuong said.

As implementation of the ASEAN-China agreement approaches, China’s steel industry has seen a decade of high growth, and China has become the world’s largest steel manufacturer with 30% of world market share. In coming years, China further promotes steel exports to other countries, including within ASEAN.

In that context, the ASEAN-China comprehensive economic co-operation could bring competitive difficulties to ASEAN steel producers, Cuong said.

Vietnam steel companies faced particular difficulties, including high debt loads and high inventories due to only seasonal demands from the construction industry. Some steel makers have such large inventories that they have been forced to decrease production, making loan repayments problematic.

“Steel makers must maintain at least 70% of their production capacity if they are to avoid losses due to the high production costs of the industry,” said Do Duy Thai, general director of Viet Steel.

According to Vietnam Steel Association statistics, however, Vietnam has a capacity to make 6 million tons of rolled steel per year, while this year’s demand on the domestic market was expected to reach only 3.8 million tons.

On the other hand, the country’s capacity for refining steel ingots was estimated to reach only 875,000 ton, requiring the importation of 2.5-2.6 million tons of steel ingots this year.

The government’s steel industry strategy up until 2010, requires an acceleration of steel ingot production to reduce this dependence on imports.

Scrap steel imports have been pushed up, with hundreds of scrap steel containers held up at the Hai Phong port due to Decision 03/2004/QD-BTNMT of the Ministry of Natural Resources and Environment, according to the Vietnam Steel Association.

Under Article 7 of Decision 03, steel manufacturers may import scrap steel and store it in warehouses that meet environmental standards. However, most manufacturers lack financial capacity to operate such warehouses, while trading companies - that might have this capacity - are not authorized to operate warehouses under the new environmental regulations.

Importers face the risk of sizable losses because they have had to pay huge amounts for warehousing and might have to re-export the scrap steel containers. The association has sent a circular to the Ministry of Natural Resources and Environment asking for the decision to be amended.

The association has suggested that steel manufacturers wanting to import large quantities of scrap steel may import by proxy through the trading companies. The trading firms can get customs clearance by presenting contracts for the scrap steel purchases signed by the steel manufacturers, and then deliver the imported scrap steel to manufacturers’ own warehouses where environmental protection authorities can inspect the steel.

(Posted Apr 1, 2006 , VNA/Asia Pulse)

Rolled steel is now in serious shortage as steel mills have halted production due to the rocketing ingot steel price.

The rolled steel price has soared to VND14.5mil/ton; however, one still cannot buy 20-30 tons of rolled steel at once, because the product is now in serious shortage.

In fact, the shortage of rolled steel began in early September 2007, and the situation has become worse as most steel mills have halted production or decreased their output.

At this moment, only Hoa Phat and Viet Han products are available on the market, selling at VND12mil/ton. Meanwhile, Thai Nguyen’s and VIS’ brand names seem to have disappeared from the market.

According to Hoang Van Tong, Deputy Director General of Thai Nguyen Cast Iron and Steel Corporation, the corporation has turned off its 700 ton/day production line, waiting for replacement accessories from Italy. The production line will be put back into operation in October. Meanwhile, the production line at Luu Xa mill has the low capacity of 380-400 tons/day, and only laminates steel when very necessary. The ingot steel made by Thai Nguyen Corporation is more suitable for making bar steel than rolled steel.

According to Le Ngoc Son, Deputy Director General of VIS, the market is lacking rolled steel because enterprises do not like making rolled steel due to low profit. While ingot steel for making rolled steel is just VND100,000/ton lower than that for making bar steel, rolled steel is always VND300,000/ton lower than bar steel.

Mr Son said that VIS churns out several hundreds tons of rolled steel only. The figure is just equivalent to the output of a one-day laminating line operation. This explains why VIS’s rolled steel cannot be seen on the market.

Dinh Van Tam, Director of Viet Han Steel Company, also said that his company was not making rolled steel recently due to low profit. The highest output of the company is 5,000 tons, while the lowest is 3,000.

Mr Tam said that no steel mill wanted to make rolled steel nowadays, since local mills found it impossible to compete with China-made rolled steel. Since mid June 2007, China-sourced rolled steel has been imported in large quantities and sold cheap on the domestic market, thus dominating the market.

However, China later decided to place a tax of 10% on export rolled steel, which made China’s rolled steel more expensive. Meanwhile, local steel mills did not make rolled steel, thus causing the shortage of rolled steel as Vietnam is entering the construction season, when the demand for rolled steel increases.

Analysts have also pointed out that the breakdown at the Phu My Steel Company, which has the capacity of 500,000 tons of ingot steel a year, also has led to the rolled steel shortage.

However, Mr Son believes that the shortage of rolled steel will be eased in the time to come when local mills make rolled steel again. The high price of rolled steel makes production profitable, and this will prompt local mills to go back to production. However, he said that the shortage will last one month more as rolled steel cannot be made overnight.

Meanwhile, Nguyen Van Thong, Deputy Director General of Van Loi Company, is not as optimistic as Mr Son. He said that ingot steel for making rolled steel from domestic sources was limited, while local mills still heavily relied on imported ingot steel. The high ingot steel price will make local mills hesitate to import in large quantities, therefore, the rolled steel shortage will continue.

According to Mr Thong, the ingot steel price has soared to $618/ton, and with the price level, finished steel must be sold at over VND11mil/ton to ensure profit for producers. He said that most local mills did not want to make rolled steel due to the very low profit.

Statistics released by the Vietnam Steel Association VSA showed that 5,639 tons of imported rolled steel arrived in Vietnam in the first 15 days of September. The import price was at $557/ton on average, and it was clear that it would be cheaper to import rolled steel if noting that the ingot steel is now at $618/ton. Therefore, local mills still are considering whether to import ingot steel to laminate steel domestically.

The Ministry of Industry and Trade has sent a dispatch to VSA, requesting its members to maintain production to ensure enough steel for the market and avoid steel shortage. It is clear that the ministry fears that the market will be short of steel when the ingot steel price rockets to $605-610/ton.

Pham Chi Cuong, Chairman of VSA, said that the ingot steel in stock was estimated at 290,000 tons, and the finished steel in stocks at 150,000 tons, enough to sell in October and the first half of November. He said that in order to churn out steel for the coming months, local mills would have to import ingot steel in large quantities, estimated at 250-300,000 tons a month.

Posted VietNamNet Bridge, September 10, 2007, Source: VietNamNet, Tuoi tre

The death toll from the collapse of a bridge under construction in southern Vietnam has risen to at least 49, a provincial official said Sunday, with three other people still missing. The official, deputy head of Can Tho province’s people’s committee, said a further 82 people were injured in Wednesday’s accident. “We are continuing our efforts to try to find the bodies of the three who are missing,” he added, but indicated there was little hope of finding anyone alive. “The official cause of the accident is still unknown but the investigators have stepped up their work.” Initial reports had put the death toll at up to 52, and then it was lowered to 46. On Saturday, officials had put it at 47. Construction of the 300-million-dollar bridge, which was largely funded by the Japanese government, was to have been finished next year. But part of the 16-kilometre (10-mile) bridge across the Hau river between Can Tho and a neighboring province collapsed early Wednesday in the nation’s worst ever such accident. Authorities have launched an inquiry and raised the possibility that the structure had been weakened by recent heavy rains.

AFP - Sunday, September 30