Steel price in Vietnam soars as safeguard measure taken; hoarding suspected
Steel price in Vietnam soars as safeguard measure taken; hoarding suspected
There have been signs of steel hoarding in anticipation of surging prices in Vietnam, on the eve of a temporary safeguard measure recently imposed on two types of steel imports into the Southeast Asian country.
Vietnam has decided to take safeguard action on steel billets and long steel products imported into the country between March 22 and October 7, according to a decision signed by the Ministry of Industry and Trade on March 7.
A safeguard action is intended to protect a specific domestic industry from an increase in imports of any product which is causing, or threatening to cause, serious injury to the industry by temporarily restricting imports of that product, according to the World Trade Organization.
On December 25, 2015, the trade industry began a probe into imports of steel billets and long steel products following complaints by Hoa Phat Steel JSC, VNSteel Corp., Thai Nguyen Iron and Steel JSC and Vietnam Italy Steel.
The four domestic steelmakers, which collectively account for 34.2 percent of the country’s supply, said their production had been affected by imported products and called for a safeguard action to be taken.
The trade industry has decided to implement a temporary safeguard measure, and steel prices have immediately spiked more than a week prior to its effective date.
On Saturday, hundreds of trucks and trailer trucks were seen queuing in long lines in front of steel plants at industrial parks in the southern province of Ba Ria-Vung Tau to wait for their turn to load products.
A driver’s assistant waiting to get steel at the factory run by Vina Kyoei said that some drivers were not able to get their steel despite queuing for two days.
“Distributors were rushing to collect products out of fear of a price rise after the safeguard action officially takes effect on March 22,” Do Duy Thai, chairman of Pomina Steel, told Tuoi Tre (Youth) newspaper on Sunday.
Thai also admitted that Pomina had increased prices of its products by VND250,000 (US$12) a metric ton for any delivery made at its plant since March 9, two days after the safeguard action was announced.
The steelmaker is scheduled to continue adjusting its prices today, March 14, according to the chairman.
Some market experts have said people are hoarding steel products to resell when prices are increased after the March 22 deadline.
However, Nguyen Dinh Phuc, general director of VNSteel, dismissed any of its distributors or dealerships speculating on its products.
“Most of the trucks waiting to get steel at our plant are doing so as per contracts previously signed with us,” Phuc told Tuoi Tre.
“The distributors and dealerships themselves also have long-term supply contracts with their partners, so it is important that they keep prices competitive and have a stable stock of the products.”
Phuc added steelmakers have been forced to hike prices as the safeguard measure coincided with a rise the costs of some raw steel materials.
In the meantime, Nguyen Van Sua, deputy chairman of the Vietnam Steel Association, said it was unreasonable for the safeguard action to affect market-driven steel prices.
“Vietnam’s steel supply is exceeding demand so it is unreasonable for prices to soar,” he said.
Sua said businesses can only take rising raw material prices as an excuse for their price hikes if the materials are imported after the time the safeguard action takes effect.
“If they are using those materials imported at low prices as late as last year or in January, it is illogical to increase prices,” he said.
