The economic slowdown has hurt Vietnamese steel sales, but the industry is much more anxious about stiff competition from Chinese and Southeast Asian steel exporters.
Pham Chi Cuong, chairman of the Vietnam Steel Association, told Thanh Nien that sluggish activity in the construction industry has hit steel consumption, which has fallen 20 percent year-on-year this month to 250,000 tons.
Cuong expects the situation to improve in the next two months when many infrastructure and housing projects are launched thanks to the government’s economic stimulus package.
He is most worried about the invasion of cheap imported steel products.
The global recession has hurt demand for steel from manufacturers and builders, prompting mills in China, the biggest producer, and Southeast Asia to cut prices and push exports.
According to VSA, about 60,000 tons of steel products have been imported from China this year.
“These products were registered with customs as alloy steel, although they are not, to benefit from a zero tariff policy,” Cuong says. “As a result, Chinese steel products are sold at VND1 million per ton less than domestic products.”
Cuong said his association has recently asked the Ministry of Industry and Trade and the General Department of Vietnam Customs to follow up on this matter and stop foreign exporters from evading tax.
In a recent case, according to VSA members, the Thanh Long Steel Company in the northern province of Hung Yen claimed 29,000 tons of steel imported from China in January and February were alloy steel.
However, a testing center of the Directorate for Standards, Metrology and Quality found that the steel products that Thanh Long imported were in fact carbon steel with only a small amount of boron added, 0.005 percent. Boron is added to steel products to increase hardness.
Carbon steel imports are currently subject to a tax rate of 12 percent. Thanh Long Steel Company would have to pay as much as VND17 billion (US$960,000) in taxes if its steel imports had been reported to customs as carbon steel.
VSA Deputy Chairman Nguyen Tien Nghi said several other Southeast Asian countries had also reported similar instances of boron being added to carbon steel to avoid tariffs.
The China Iron and Steel Association has asked Vietnam to provide a name list of Chinese exporters of such products so that it can intervene, Nghi added.
ASEAN exporters
VSA said the imports from ASEAN reached 47,000 tons in the first two months this year. The large imports have pushed domestic firms’ market share down to 20 percent from 28-30 percent earlier.
Steel exports within the 10-member Association of Southeast Asian Nations, or ASEAN, are exempt from tariffs. The grouping’s members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Dao Dinh Dong, head of the market division at the Vietnam Steel Corporation, said sales of the corporation in March dropped 35 percent from a year ago.
Dong said many steel makers in Vietnam are facing harsh competition from imports from other ASEAN members. His company had had to slash prices four times in just one month.
Domestic steel producers, with a capacity of around 4.5 million tons, had 300,000 tons of billet in stock, Cuong said last week.
The Ministry of Finance has decided to increase the import tax on steel billet from 5 percent to 8 percent and the tax on finished steel from 12 percent to 15 percent to help local steel firms liquidate their growing stockpiles.
The new rates take effect April 1. But they will not affect the zero tariff policy among ASEAN nations.
Source: Thanh Nien
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