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November 22, 2008


Vietnam steel consumption in August cashes to 5 year low

Vietnam Steel Association said that monthly steel sales in August 2008 plunged to a five year low of a mere 120,000 tonnes due mainly to a halt of major construction projects across the country, causing great damage to both steel makers and producers of steel ingots. The decline in steel consumption has been also affecting steel ingots producers in Vietnam, forcing them to scale down production to avoid huge losses.

The total consumption of steel products of Vietnam between January and July 2008 was some 2.1 million tonnes including some 75,000 tonnes of exported steel products, averaging out at 300,000 tonnes a month.

Mr Nguyen Tien Nghi VC of VSA said that the steel consumption in August 2008 was far lower than the monthly average. He added that "Steel consumption used to be between 180,000 and 300,000 tonnes per month before, but sales in August 2008 fell to an unprecedented level."

Mr Nghi pointed an accusing finger to the suspension of major construction projects in the country, especially after the government ordered state owned enterprises to put on hold construction projects deemed unnecessary or less cost effective. He also said the rainy season was usually the low demand period.

He said that the steel consumption at companies as members of the association in the second haft of the year would be only some 1.6 million tonnes as compared to 1.8 million tonnes in the first half, meaning total consumption this year would be about 3.4 million tonnes.

Mr Do Duy Thai general director of Viet Steel Company said that its steel output was cut down by some 30% to 40% in August 2008 due to very low demand from the market these days. It has total production capacity of some 350,000 tonnes of finished steel products and some 600,000 tons of steel ingots a year.

To help steel material producers cope with the financial burden, VSA last week proposed the ministry of industry & trade and the finance ministry to halve the export tariff on steel ingots to 10%.