Steel price drops as market continues to grow
Steel price drops as market continues to grow
The price of steel produced by the Vientiane Steel Industry (VSI) has gone down this year as pricing in the regional and international markets has constantly varied, a senior company official said.
“We accept that the price of steel varies each year, it depends on the pricing in the regional and global markets,” VSI Deputy Managing Director Mr Sonesavanh Soukdala told Vientiane Times yesterday.
Despite the fact that the price is dropping, the climate for sales remains unchanged due to the rapid growth in development, especially in Vientiane.
The company produces a range of steel rod s for the construction industry coded with the numbers 6, 9, 10, 12, 14, 16 and 20 which are related to the rod's diameter.
Steel rods numbered 10, 12, 14, 16 and 20 sell for 6.3 million kip per tonne while no. 9 is sold at 6.4 million kip per tonne and no. 6 at 6.5 million kip per tonne.
In 2013, the highest price of steel stood at 7 million kip per tonne with the lowest price recorded at 6.8 million kip per tonne.
Mr Sonesavanh said the company imports about 50 percent of its raw materials from Thailand with the other 50 percent bought locally.
“We have a target to increase domestic purchases of raw materials to 60 percent in order to decrease the amount of imported materials,” he said, adding that many mega construction projects in Laos can be sourced for raw materials.
The steady development of the country calls for the supply of a large amount of construction materials, including steel, and local manufacturers are working hard to produce more to meet this growing demand.
Asked if the company foresees any challenging issues when the Asean Economic Community (AEC) comes into effect at the end of next year, Mr Sonesavanh said that AEC will bring great challenges to the steel industry in Laos.
“When the country becomes part of the AEC, we are looking at improving the quality of our products as well as installing more modern technology to ensure our goods are produced to match international standards so we can compete with other Asean produced steel,” Mr Sonesavanh said.
Steel processing in Laos still relies on raw materials being imported from other countries, however, which creates a lot of challenges for the manufacturers.
There are many iron ore mines in Laos but logistical problems prevent the country from building a processing plant.
A sufficiency of coal, electricity and lime are also essential in the process of the conversion of iron to steel.
At present, the country is still importing electricity from neighbouring countries at a higher cost than domestic consumption.
“If the metal has to be processed using electricity at a higher cost, manufacturing steel in Laos will be unprofitable,” a senior official at the Ministry of Energy and Mines said recently.
vientiane times
