Steel firms struggle to cut inventory

Steel firms struggle to cut inventory

Domestic 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 steel output was 270,000 tonnes, up 13,000 tonnes over the previous month. As a result, steel inventories grew from 330,000-350,000 tonnes.

Statistics from the General Department of Customs also showed that imported steel had reached 800,000 tonnes so far. The imports were still higher than domestic steel production and consumption though the amount was 11.6 per cent lower than the same period last year.

Several steelmakers 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 Vietnamese steel imports.

The Viet Nam 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 per cent of steel makers had used backward technology, 40 per cent used average technology and 30 per cent 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 material production and be less dependent on imports.

Do Duy Thai, chairman of Pomina Steel Company's Management Board said interest rates for mid-term loans should be reduced to support steel producers.

The association chairman Pham Chi Cuong added the businesses should themselves find solutions by proper and regular planning and setting up distribution networks.

Cuong suggested businesses promote relations with agents and update market information.

vietnamnews