The Ministry of Finance’s Price Control Department has asked the Vietnam Steel Association (VSA) to report about steel mills’ business performances in the first half of the year. The request has been described as an action of interfering in enterprises’ internal affairs.
The Price Control Department wants to receive the reports about the production and sale of steel mills in the first half of the year and the expected operation in the second half prior to July 25. Nguyen Tien Thoa, Head of the department, said that the report would provide important information to help the department make suitable decisions on stabilising the steel market.
VSA has been instructed to provide detailed information about the total expenses for ingot steel production, the cost for making construction steel from locally made and imported ingot steel. The price control department also asked for other information, including ingot steel and scrap steel import prices and wholesale price levels.
But VSA has expressed displeasure with the request from the state management authority. VSA Chairman Pham Chi Cuong said that the agency was getting too deeply involved in the business of enterprises, saying that this was a beyond-VSA-capacity request.
Mr Cuong complained that the association was only supposed to keep watch over the monthly selling prices of enterprises, not ask its members to provide details about their business performances, because this is a kind of business secret.
Currently, steel is not a commodity of which the state controls the pricing, which means that enterprises can define the selling prices themselves based on the supply and demand basis.
However, the price control department is concerned about the sharp price increase in steel prices in the last two months. The price has increased by nearly VND2mil/tonne over the same period last year. Mr Thoa said that continued steel price increases would badly affect the national economy.
The sharp price increase has been explained by VSA as the result of the higher ingot price in the world. However, the explanation has not been accepted by the public. Analysts have said that mills now were still using cheap ingot steel imported in May for finished steel production but using the tax rate increases to raise their selling prices.
In early July, the steel price in HCM City increased further by VND150-200,000/tonne as a series of steel producers including Vina Kyoei, Southern Steel Corporation and Pomina began applying new price policies. Rolled steel is now selling at VND9.35-9.68mil/tonne, while bar steel, at VND10.2mil/tonne.
Source: VNE
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