Vietnam firms struggle to cut inventory

Vietnamese steel producers are facing difficulties because of the quiet real estate  market, decreased selling prices, imported steel and shortage of capital.

The Ministry of Construction reported last month's (May 2013) steel output was  270kt, up 13kt over the previous month. As a result, steel  inventories grew from 330kt to 350kt.

Statistics from the General Department of Customs also showed that imported steel  had reached 800kt in Jan-May 2013.. Imports were higher than domestic  steel production as was consumption despite this falling 11.6% compared with a year earlier.

Several steel makers reported they had not been able to access loans at low interest  rates.

In addition, the steel industry was faced with a range of challenges from European  Union countries which had applied anti-dumping taxes on imports of certain Vietnamese steel grades.

The Vietnam Steel Association said the most difficult factor for the industry was  a shortage of capital. Steel businesses had to depend on loans, imported materials  and old-fashion technologies, resulting in high production costs and low  competitiveness.

The association's figures showed that nearly 30% of steel makers had used  backward technology, 40% used average technology and 30% used  modern and advanced technology.

The association said the businesses should gradually introduce new technology as  the cost of energy had been on the rise. This should be a long-term solution for the  industry, it said.

The sector should also invest in increasing production to be less dependent on  imports.

The association chairman Pham Chi Cuong added the businesses should  themselves find solutions by proper and regular planning and setting up  distribution networks. He also suggested businesses promote relations with agents and update market  information.

Source: Daily ‘Vietnam News’, Hanoi; 15 June 2013