Lower steel prices cut into earnings

Lower steel prices cut into earnings

Domestic steel producers are rushing to slash prices, even cutting them lower than production costs in a desperate bid to stimulate consumption. However, the unhealthy competition has made them suffer losses.

Steel inventories have been piling up, forcing steel makers to scale down production. Last month, inventory grew from 320,000 tonnes to 350,000 tonnes, according to the Viet Nam Steel Association (VSA).

Nguyen Tien Nghi, VSA vice chairman, said the inventory growth was due to the frozen real estate market. The lack of sales forced steel companies to reduce selling prices to retain their market share, he said, but demand was nevertheless continuing to shrink as people waited for a deeper price decrease.

Last year, businesses reduced steel pipe prices by VND300,000-500,000 (US$14.30-23.80) per tonne.

According to the General Department of Customs, steel selling prices saw the highest decrease in March.

The association said input costs for steel production had not decreased while prices of other goods were on the rise, pushing up production costs.

Therefore, steel makers should not continue to lower their prices, it advised. Rather, they should reduce costs as much as they could and bring down inventories to ensure sustainable production and employment for workers.

vietnamnews