Under the strategy on steel industry development from 2007-2015 with a vision towards 2025, which has been approved by the Prime Minister, Vietnam strives to export 0.5mil tonnes of steel of different kinds.
According to the Ministry of Industry and Trade, the total volume of finished steel to be demanded by 2010 will be 11-12mil tonnes. The figures will be 15-16mil tonnes by 2015 and 24-25mil tonnes by 2025.
The general goal of the steel industry is to satisfy at the highest possible level the demand for steel products of the national economy and make steel for export. As for cast iron production, Vietnam aims to churn out 1.5-1.9mil tonnes by 2010, 5-5.8mil tonnes by 2015 and 10-12mil tonnes by 2025. As for ingot steel production, the local industry strives to put out 3.5-4.5mil tonnes by 2010, 6-8mil tonnes by 2015 and 12-15mil by 2025. Meanwhile, the production of finished steel is expected to provide 6.3-6.5mil tonnes by 2010, 11-12mil by 2015, and 19-22mil tonnes by 2025, including 11-13mil tonnes of flat steel and 0.2mil tonnes of special products.
Not only aiming to satisfy domestic demand, the strategy says that Vietnam will export steel products. However, the targeted exports prove to be modest: 0.5-0.7mil tonnes of cast iron and steel of different kinds by 2010. The volume to be exported 15 years later, by 2025, will be 1.2-1.5mil tonnes.
The strategy mentions the six big projects, saying that the implementation of the six projects, scheduled for 2007-2015, will be the most important tasks. These include 1. the Ha Tinh Steel Combinate (expected capacity 4.5mil tonnes/year, to be operational in 2011) 2. Dung Quat Complex (5mil tonnes/ year, the second phase of the project to begin in 2011) 3. South Korea’s Posco’s hot and cold rolled and galvanised steel mill (3mil tonnes/year) 4. the plate rolled steel mill to be invested in by India’s ESSA and a local partner 5. the project on expanding Thai Nguyen Cast Iron and Steel Mill and 6. the Lao Cai Steel Combinate.
Besides high capacity cast iron blast furnaces, Vietnam will also pay appropriate attention to developing medium- and small-scale workshops in northern mountainous areas, including Lao Cai, Tuyen Quang, Cao Bang, Ha Giang, Yen Bai, Bac Kan with the total capacity of 1mill tonnes a year.
In the 2016-2015 period, Vietnam will focus on producing steel with electricity-run furnaces and consider producing special steel products used in engine manufacturing and national defence.
Under the recently approved strategy, Vietnam will need $10-12bil from 2007-2025 for the investment in steel mills, of which $8bil will be used in 2007-2015. In order to have such a huge capital, Vietnam will have to diversify capital sources while pushing up the equitisation process.
Eight groups of solutions for the steel industry’s development are mentioned in the strategy, including ones on investment cooperation, material source development, training staffs, investment in science and technologies, and environmental protection as well.
Source: VNE
Showing posts with label Steel. Show all posts
Showing posts with label Steel. Show all posts
Thursday, September 06, 2007
Monday, August 13, 2007
POSCO plans $4.5 bln-steel mill in Vietnam
POSCO, the world's third-largest steel maker, is seeking approval from the Vietnamese government to build a $4.5 billion steel mill with a local partner, state media reported on Monday.
The Dau Tu (Investment) newspaper quoted a POSCO proposal to the Vietnamese government as saying it would form a venture with dominant state shipbuilder Vinashin in which Vinashin will hold a 30 percent stake in the mill.
The hot-rolled steel mill, located in Van Phong Bay in the south central coastal province of Khanh Hoa, adjacent to a key transhipment port project, will be completed by 2010, the report said.
The group has already started construction of a $1.13 billion cold-rolled steel plant, which is scheduled to begin production in 2009 in the southern coastal province of Ba Ria-Vung Tau.
Source: Reuters
The Dau Tu (Investment) newspaper quoted a POSCO proposal to the Vietnamese government as saying it would form a venture with dominant state shipbuilder Vinashin in which Vinashin will hold a 30 percent stake in the mill.
The hot-rolled steel mill, located in Van Phong Bay in the south central coastal province of Khanh Hoa, adjacent to a key transhipment port project, will be completed by 2010, the report said.
The group has already started construction of a $1.13 billion cold-rolled steel plant, which is scheduled to begin production in 2009 in the southern coastal province of Ba Ria-Vung Tau.
Source: Reuters
Friday, August 03, 2007
Higher ingot steel price bringing fat profit to steel producers
Steel mills have got fat profit as they have been able to buy ingot steel at low prices and sell at high prices. A source said the profit the mills earned in June and July reached several tens of billion dong.
In the first six months of the year, ingot steel imports reached 1,083mil tonnes, and in May alone, the import volume was 375,000 tonnes. Currently, steel mills mainly use ingot steel imported in May at lower prices to make finished products.
Considering that the steel mills bought ingot steel at $485/tonne (VND7.8mil/tonne) and sold at VND10.2mil/tonne, they would make the profit of VND1mil/tonne. If an enterprise sells 10,000 tonnes of steel at that price the profit it reaps is VND10bil ($0.625mil).
Meanwhile, the escalating price of steel has caused losses for the national economy. According to Nguyen Tien Thoa, Head of the Pricing Department under the Ministry of Finance, the government has to spend VND1,800bil ($112.5mil) more on the projects using state budget sourced capital due to the increased steel price. A lot of construction works have been halted as they need more capital to cover the steel price increases.
In its latest move, the government has asked the Ministry of Finance to set up an inter-ministerial team in charge of inspecting steel mills. Nguyen Tien Thoa, Head of the Price Control Department under the Ministry of Finance, said that the inspection was necessary in this context, as the government has been applying drastic measures to curb inflation but failed to force the steel price down.
Mr Thoa said that when material prices increase, steel producers raise the selling prices of finished steel immediately, but when material prices decrease, steel producers do not reduce their selling prices.
According to the Vietnam Steel Association, the ingot steel imported in July 2007 from China fell by $10/tonne to $510-518 CFR; however, the prices of finished steel remain unchanged.
Now steel mills are selling construction bar steel at VND9,800-10,200/kg (not including discounts and VAT), and rolled steel at VND9,200-10,000/kg, which are equal to that in June 2007.
In June 2007, when the ingot steel price began increasing to over $500/tonne, steel producers immediately raised the selling prices to over VND10mil/tonne.
Analysts have pointed out that steel mills did not make steel with expensive ingot steel, because the ingot steel volume imported in June and July, when the price increased, was low. In June, for example, ingot steel imports were 121,000 tonnes only, while the figure was 100,000 tonnes in July.
It is expected that ingot steel will decrease further in August thanks to stable supplies. However, there are no signs of finished steel price decreases.
Source: VNE
In the first six months of the year, ingot steel imports reached 1,083mil tonnes, and in May alone, the import volume was 375,000 tonnes. Currently, steel mills mainly use ingot steel imported in May at lower prices to make finished products.
Considering that the steel mills bought ingot steel at $485/tonne (VND7.8mil/tonne) and sold at VND10.2mil/tonne, they would make the profit of VND1mil/tonne. If an enterprise sells 10,000 tonnes of steel at that price the profit it reaps is VND10bil ($0.625mil).
Meanwhile, the escalating price of steel has caused losses for the national economy. According to Nguyen Tien Thoa, Head of the Pricing Department under the Ministry of Finance, the government has to spend VND1,800bil ($112.5mil) more on the projects using state budget sourced capital due to the increased steel price. A lot of construction works have been halted as they need more capital to cover the steel price increases.
In its latest move, the government has asked the Ministry of Finance to set up an inter-ministerial team in charge of inspecting steel mills. Nguyen Tien Thoa, Head of the Price Control Department under the Ministry of Finance, said that the inspection was necessary in this context, as the government has been applying drastic measures to curb inflation but failed to force the steel price down.
Mr Thoa said that when material prices increase, steel producers raise the selling prices of finished steel immediately, but when material prices decrease, steel producers do not reduce their selling prices.
According to the Vietnam Steel Association, the ingot steel imported in July 2007 from China fell by $10/tonne to $510-518 CFR; however, the prices of finished steel remain unchanged.
Now steel mills are selling construction bar steel at VND9,800-10,200/kg (not including discounts and VAT), and rolled steel at VND9,200-10,000/kg, which are equal to that in June 2007.
In June 2007, when the ingot steel price began increasing to over $500/tonne, steel producers immediately raised the selling prices to over VND10mil/tonne.
Analysts have pointed out that steel mills did not make steel with expensive ingot steel, because the ingot steel volume imported in June and July, when the price increased, was low. In June, for example, ingot steel imports were 121,000 tonnes only, while the figure was 100,000 tonnes in July.
It is expected that ingot steel will decrease further in August thanks to stable supplies. However, there are no signs of finished steel price decreases.
Source: VNE
Thursday, August 02, 2007
VNECO sets Aug 9 share debut
Vietnam Electricity Construction Corporation (Vneco) will make its debut on the Ho Chi Minh Stock Exchange <.VNI> next week, chief executive Doan Duc Hong said on Thursday.
Vneco, which will become the market's 111th listed firm, would list all its 32 million shares on Aug. 9 at a starting price of 65,000 dong ($4), valuing the firm at $128 million, he said in a statement.
Based in the central city of Danang, Vneco builds electricity distribution networks, airports and sea ports, trades steel products and real estate and runs tours and hotels.
"The corporation is now speeding investment in hydro-power plants, infrastructure and housing projects, dealing with real estate and invests in tourism and services," Vneco said on its Web site (http://www.vneco.vn/).
Vietnam plans to double power generation capacity to about 28,000 megawatt by 2010 to meet forecast annual demand growth of about 20 percent as the economy continues to expand rapidly at a forecast range of 8.5 percent and 9 percent per year.
The communist government plans to build 60 additional power plants by 2020.
Construction accounted for 77.6 percent of Vneco's revenues in 2006, up from 73 percent in 2005.
Vneco said its net profit soared 317 percent last year from 2005 to 66.72 billion dong ($4 million) as revenues jumped 91 percent to 877.33 billion dong ($54.3 million).
The Ho Chi Minh Stock Exchange's VN Index rose 1.67 percent to 923.14 points on Wednesday, when its market capitalisation was $12.6 billion.
Source: Reuters
Vneco, which will become the market's 111th listed firm, would list all its 32 million shares on Aug. 9 at a starting price of 65,000 dong ($4), valuing the firm at $128 million, he said in a statement.
Based in the central city of Danang, Vneco builds electricity distribution networks, airports and sea ports, trades steel products and real estate and runs tours and hotels.
"The corporation is now speeding investment in hydro-power plants, infrastructure and housing projects, dealing with real estate and invests in tourism and services," Vneco said on its Web site (http://www.vneco.vn/).
Vietnam plans to double power generation capacity to about 28,000 megawatt by 2010 to meet forecast annual demand growth of about 20 percent as the economy continues to expand rapidly at a forecast range of 8.5 percent and 9 percent per year.
The communist government plans to build 60 additional power plants by 2020.
Construction accounted for 77.6 percent of Vneco's revenues in 2006, up from 73 percent in 2005.
Vneco said its net profit soared 317 percent last year from 2005 to 66.72 billion dong ($4 million) as revenues jumped 91 percent to 877.33 billion dong ($54.3 million).
The Ho Chi Minh Stock Exchange's VN Index rose 1.67 percent to 923.14 points on Wednesday, when its market capitalisation was $12.6 billion.
Source: Reuters
Wednesday, July 25, 2007
Viet Nam’s steel industry firms up
Viet Nam's steel industry is heatening up on the back of foreign investors queuing up to take advantage of the country's expanding economy and increasing demand for steel from the domestic construction sector.
India's Tata Group, one of the six largest steel companies globally exemplifies the interest that overseas firms have in the market. The group is about to get a 3.5 billion USD rolled steel facility underway near the Thach Khe iron mine in central Ha Tinh province that when fully operational will roll out 4.5 million tonnes a year.
Speaking with a Viet Nam News Agency’s correspondent, President of the Viet Nam Steel Association Pham Chi Cuong said the presence of big international steel groups in Viet Nam reinforced the attractiveness of a Vietnamese steel market that has been fuelled by an average yearly domestic demand growth of 40 percent.
Hooking up on a joint venture in Hai Phong to produce steel pipes and rolled steel and another in Ho Chi Minh City to manufacture corrugated iron, the Republic of Korea's Posco Group is now planning to invest in a steel plant with a total output capacity of 3 million tones of rolled steel at the Phu My 2 Industrial Zone in southern Ba Ria-Vung Tau province. Work on the 1 billion USD plant is scheduled to begin in August.
Cuong said Posco has also signed a deal with the Viet Nam Shipbuilding Industry Corporation (Vinashin) to build a steel complex with a capacity of 5 million tonnes of steel plates and rolled steel per year.
India's Essar has also linked up with the Viet Nam Steel Corporation and the Viet Nam Rubber Corporation on a 527 million USD project in Ba Ria-Vung Tau province that will pump over 2 million tonnes of rolled steel per year into the domestic market.
In central Quang Ngai province, Taiwan’s Tycoons and E-United have received the green light from the local authorities to invest 1.8 billion USD in a plant in the Dung Quat Economic zone. Construction of the plant is slated to begin in mid-October.
George E. Kobrossy, General Director of Zamil Steel Viet Nam, which has been operating in the country for over a decade, pointed to a low cost work force, political stability, incentives from the Vietnamese Government and a readiness of local businesses to cooperate as primary reasons for the boom in the industry.
Source: VNA
India's Tata Group, one of the six largest steel companies globally exemplifies the interest that overseas firms have in the market. The group is about to get a 3.5 billion USD rolled steel facility underway near the Thach Khe iron mine in central Ha Tinh province that when fully operational will roll out 4.5 million tonnes a year.
Speaking with a Viet Nam News Agency’s correspondent, President of the Viet Nam Steel Association Pham Chi Cuong said the presence of big international steel groups in Viet Nam reinforced the attractiveness of a Vietnamese steel market that has been fuelled by an average yearly domestic demand growth of 40 percent.
Hooking up on a joint venture in Hai Phong to produce steel pipes and rolled steel and another in Ho Chi Minh City to manufacture corrugated iron, the Republic of Korea's Posco Group is now planning to invest in a steel plant with a total output capacity of 3 million tones of rolled steel at the Phu My 2 Industrial Zone in southern Ba Ria-Vung Tau province. Work on the 1 billion USD plant is scheduled to begin in August.
Cuong said Posco has also signed a deal with the Viet Nam Shipbuilding Industry Corporation (Vinashin) to build a steel complex with a capacity of 5 million tonnes of steel plates and rolled steel per year.
India's Essar has also linked up with the Viet Nam Steel Corporation and the Viet Nam Rubber Corporation on a 527 million USD project in Ba Ria-Vung Tau province that will pump over 2 million tonnes of rolled steel per year into the domestic market.
In central Quang Ngai province, Taiwan’s Tycoons and E-United have received the green light from the local authorities to invest 1.8 billion USD in a plant in the Dung Quat Economic zone. Construction of the plant is slated to begin in mid-October.
George E. Kobrossy, General Director of Zamil Steel Viet Nam, which has been operating in the country for over a decade, pointed to a low cost work force, political stability, incentives from the Vietnamese Government and a readiness of local businesses to cooperate as primary reasons for the boom in the industry.
Source: VNA
Sunday, July 22, 2007
High imported steel ingot leads to steel price hike
Steel price rose to around 2 million VND per tonne from the end of 2006 due to the increasing prices of imported steel ingot, energy and transportation, said the Viet Nam Steel Association (VSA).
In an official dispatch sent to the Ministry of Finance on July 20, the VSA said that the price of imported steel ingot rose from 389 USD per tonne in 2006 to 513 USD per tonne in June 2007.
The VAS said that steel producers are required to reduce production costs and dependence on imported steel ingot to stabilize price on the local market.
Locally manufactured steel ingot is expected to meet almost half of the domestic market’s demand this year and the proportion is expected to reach up to 80 percent when more steel ingot plants are put into operation, said the VSA.
Source: VNA
In an official dispatch sent to the Ministry of Finance on July 20, the VSA said that the price of imported steel ingot rose from 389 USD per tonne in 2006 to 513 USD per tonne in June 2007.
The VAS said that steel producers are required to reduce production costs and dependence on imported steel ingot to stabilize price on the local market.
Locally manufactured steel ingot is expected to meet almost half of the domestic market’s demand this year and the proportion is expected to reach up to 80 percent when more steel ingot plants are put into operation, said the VSA.
Source: VNA
Friday, July 20, 2007
Will there be enough iron ore for ingot steel mills?
As a lot of projects on ingot steel mills will become operational in the near future, worry has been raised about whether or not there will be enough iron ore to run the ingot steel mills.
Someone may say that this is not the biggest worry as ingot steel mills can collect iron ore on the domestic market. Currently, Vietnam exports 2mil tonnes of iron ore every year to China. However, the problem is that blast furnace ingot steel mills cannot use low-quality ore. Therefore, the ore the mills can purchase on the market would not be able to satisfy the demand of the mills in terms of quality.
In the last few years, due to mismanagement, several iron ore mines have been open for people to exploit spontaneously. This has created the illusion that Vietnam is very rich in iron ore, and that the iron ore reserve is enough for many mills. In fact, several blast furnaces in Thai Nguyen and Bac Kan in the north which have been built recently have had to halt production for some time due to lack of ore.
The Thai Nguyen Cast Iron and Steel Company, when deciding to make investment in the Nguom Trang iron ore mine in Cao Bang, made an investigation of the mine’s reserve and found out that the real reserve was just equal to ½ of that in previous reports.
Of course, steel mills have another choice: run the blast furnaces with imported ore. However, a question might be raised: where will the imported ore come from? The countries which export ore, including Australia, Brazil and India, are very far from Vietnam. In order to import ore at low prices, Vietnam needs to have big ships, and deep water ports capable of receiving big ships of more than 70,000 tonnes. Moreover, Vietnam also needs to have specialised ports for importing iron ore, a product that can create dust.
Vietnam does not have fat coal to make coke coal for metallurgical complexes. There is a small mine of fat coal in the Thai Nguyen Complex but Vietnam still has to import coke coal from China. The blast furnaces to be built in the near future will have to consume coke coal imports, a thing that is worth considering when making investment decisions.
It would be a big problem to import more coke coal from China as the country has been trying to limit exports of coke coal due to environmental problems. Vietnamese enterprises must get approval from the Government of China to import up-to-standard product. The approval is not required to import product made in Chinese localities, but the product always has problems in quality.
Experts said that except the projects invested in by joint ventures or 100% foreign owned enterprises, which use modern technologies, other investors tend to use backward Chinese technologies that even Chinese mills do not use any more. The strategy on steel industry development by the Chinese Government stipulates that backward technologies and small-scale steel mills are not allowed in China. The country well understands that backward equipment will consume more coal, power and water, which make the products uncompetitive.
Source: VNE
Someone may say that this is not the biggest worry as ingot steel mills can collect iron ore on the domestic market. Currently, Vietnam exports 2mil tonnes of iron ore every year to China. However, the problem is that blast furnace ingot steel mills cannot use low-quality ore. Therefore, the ore the mills can purchase on the market would not be able to satisfy the demand of the mills in terms of quality.
In the last few years, due to mismanagement, several iron ore mines have been open for people to exploit spontaneously. This has created the illusion that Vietnam is very rich in iron ore, and that the iron ore reserve is enough for many mills. In fact, several blast furnaces in Thai Nguyen and Bac Kan in the north which have been built recently have had to halt production for some time due to lack of ore.
The Thai Nguyen Cast Iron and Steel Company, when deciding to make investment in the Nguom Trang iron ore mine in Cao Bang, made an investigation of the mine’s reserve and found out that the real reserve was just equal to ½ of that in previous reports.
Of course, steel mills have another choice: run the blast furnaces with imported ore. However, a question might be raised: where will the imported ore come from? The countries which export ore, including Australia, Brazil and India, are very far from Vietnam. In order to import ore at low prices, Vietnam needs to have big ships, and deep water ports capable of receiving big ships of more than 70,000 tonnes. Moreover, Vietnam also needs to have specialised ports for importing iron ore, a product that can create dust.
Vietnam does not have fat coal to make coke coal for metallurgical complexes. There is a small mine of fat coal in the Thai Nguyen Complex but Vietnam still has to import coke coal from China. The blast furnaces to be built in the near future will have to consume coke coal imports, a thing that is worth considering when making investment decisions.
It would be a big problem to import more coke coal from China as the country has been trying to limit exports of coke coal due to environmental problems. Vietnamese enterprises must get approval from the Government of China to import up-to-standard product. The approval is not required to import product made in Chinese localities, but the product always has problems in quality.
Experts said that except the projects invested in by joint ventures or 100% foreign owned enterprises, which use modern technologies, other investors tend to use backward Chinese technologies that even Chinese mills do not use any more. The strategy on steel industry development by the Chinese Government stipulates that backward technologies and small-scale steel mills are not allowed in China. The country well understands that backward equipment will consume more coal, power and water, which make the products uncompetitive.
Source: VNE
Vietnam Steel and Ministry of Finance don’t speak common language
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
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
Thursday, July 19, 2007
Ingot steel production booming
Together with the establishment of a lot of steel laminating mills, Vietnam is now witnessing the boom of ingot steel mills, which use blast-furnace technology (using iron ore as the material) with the total capacity of more than 2mil tonnes/year.
According to the Vietnam Steel Association (VSA), the steel consumption level in 2006 reached 7.2mil tonnes, including 4.7mil tonnes of domestically made products, and 3.8mil tonnes of imports. The figure showed that the consumption level per capita was 85kg in 2006, which, according to experts, is nearly equal to the consumption level in the countries with the developed industry, at 100 kg per capita.
Meanwhile, Vietnam’s steel industry is still in the very first period of development with small and medium scale mills. The production of ingot steel, from which finished steel is made, just could provide 1.4mil tonnes in 2006, while flat steel products (plate, sheet) cannot be produced domestically and must be fed by imports. Only in May 2005, did the first mill specializing in making hot rolled steel become operational in Ba Ria – Vung Tau province. The 400,000 tonnes/year mill planned to churn out 300,000 tonnes this year.
The total value of imported steel products was $2bil in 2006. If counting the money spent to import scrap steel and ingot steel for running laminating steel mills, the sum would be $3.158mil. In the first six months of the year alone, Vietnam imported 4.7mil tonnes of ingot steel and scrap steel, worth more than $2.4bil
The growth rate of steel consumption is expected to be not below 20% in 2007, which makes Vietnam a very attractive market for domestic and foreign investors.
A lot of steel projects were announced in the first six months of the year, prompting investors to make investment in ingot steel mills, which will provide ingot steel to laminating steel mills. The investment in ingot steel projects promises attractive profits, especially when the ingot steel prices are very high on the world’s market.
According to VSA, Vietnam has made thorough exploration in two iron ore mines Thach Khe in the central province of Ha Tinh, and Quy Xa in Lao Cai province in the north, and several other small mines. Meanwhile, only the preliminary exploration has been conducted in most of the other mines, which cannot give reliable figures about the iron ore reserves. Investors should thoroughly consider the stable resources of local iron ore before making investment decisions. The material sources must be rich enough to ensure the stable supply of iron for at least 20-30 years, or even 50 years, the average life expectancy of one blast-furnace and one steel complex.
Experts recently have warned about the oversupply of steel capacity. The existing steel laminating mills have the total capacity of 6mil tones a year, or double the demand, while the total capacity of the operational mills producing tube steel has reached 1mil tones/year, double the demand. Meanwhile, the existing mills specializing in metal galvanizing and colouring with 1mil tones/year in capacity are now running at 60% of the designed capacity due to the oversupply.
However, despite the exceeding capacity, all the existing mills are all small ones with low capacity, including the said blast-furnace mills. A laminating steel mill has the capacity at 200-300,000 tonnes a year on average, and only two mills have the capacity of 500,000 tonnes a year for each.
In fact, Vietnamese investors are not powerful enough to build big scale mills which can make the products with high competitiveness, and be environmentaly friendly with newer technologies.
Source: VNE
According to the Vietnam Steel Association (VSA), the steel consumption level in 2006 reached 7.2mil tonnes, including 4.7mil tonnes of domestically made products, and 3.8mil tonnes of imports. The figure showed that the consumption level per capita was 85kg in 2006, which, according to experts, is nearly equal to the consumption level in the countries with the developed industry, at 100 kg per capita.
Meanwhile, Vietnam’s steel industry is still in the very first period of development with small and medium scale mills. The production of ingot steel, from which finished steel is made, just could provide 1.4mil tonnes in 2006, while flat steel products (plate, sheet) cannot be produced domestically and must be fed by imports. Only in May 2005, did the first mill specializing in making hot rolled steel become operational in Ba Ria – Vung Tau province. The 400,000 tonnes/year mill planned to churn out 300,000 tonnes this year.
The total value of imported steel products was $2bil in 2006. If counting the money spent to import scrap steel and ingot steel for running laminating steel mills, the sum would be $3.158mil. In the first six months of the year alone, Vietnam imported 4.7mil tonnes of ingot steel and scrap steel, worth more than $2.4bil
The growth rate of steel consumption is expected to be not below 20% in 2007, which makes Vietnam a very attractive market for domestic and foreign investors.
A lot of steel projects were announced in the first six months of the year, prompting investors to make investment in ingot steel mills, which will provide ingot steel to laminating steel mills. The investment in ingot steel projects promises attractive profits, especially when the ingot steel prices are very high on the world’s market.
According to VSA, Vietnam has made thorough exploration in two iron ore mines Thach Khe in the central province of Ha Tinh, and Quy Xa in Lao Cai province in the north, and several other small mines. Meanwhile, only the preliminary exploration has been conducted in most of the other mines, which cannot give reliable figures about the iron ore reserves. Investors should thoroughly consider the stable resources of local iron ore before making investment decisions. The material sources must be rich enough to ensure the stable supply of iron for at least 20-30 years, or even 50 years, the average life expectancy of one blast-furnace and one steel complex.
Experts recently have warned about the oversupply of steel capacity. The existing steel laminating mills have the total capacity of 6mil tones a year, or double the demand, while the total capacity of the operational mills producing tube steel has reached 1mil tones/year, double the demand. Meanwhile, the existing mills specializing in metal galvanizing and colouring with 1mil tones/year in capacity are now running at 60% of the designed capacity due to the oversupply.
However, despite the exceeding capacity, all the existing mills are all small ones with low capacity, including the said blast-furnace mills. A laminating steel mill has the capacity at 200-300,000 tonnes a year on average, and only two mills have the capacity of 500,000 tonnes a year for each.
In fact, Vietnamese investors are not powerful enough to build big scale mills which can make the products with high competitiveness, and be environmentaly friendly with newer technologies.
Source: VNE
Wednesday, June 20, 2007
Steel price hike makes construction works suffer
The steel price saw the dizzy price increase of VND2mil/tonne in the last two months, putting contractors into a dilemma.
According to the Vietnam Steel Association (VSA), its members now sell steel at VND9-9.5mil/tonne (not including VAT). If counting on the 10% VAT, transportation fee, commission for sales agents, customers can purchase steel at VND10-10.5mil/tonne on average, while the price may reach VND11mil/tonne in remote areas.
Steel prices have been rising since mid April 2007. In the north, producers raised the price by VND200-300,000/tonne since the end of May. In the south, the price has been raised by VND150,000-200,000/tonne since the beginning of June.
The south saw the lower price increases compared to the north because the Southern Steel Corporation tried to keep the low selling prices in order to gain the yearly output plan. In the first months of the year, the sales were slow and the corporation tried to offer low prices in a bid to boost sales.
However, once the sales were improved (the corporation could sell 70,000 tonnes in May alone), it began raising the selling price by VND150,000/tonne of rolled steel and VND200,000/tonne of bar steel. The move has been followed by other producers.
The Southern Steel Corporation has announced it would raise the price by another VND200,000/tonne, and the new prices will be applied as of June 20. As such, the bar steel will be priced at VND9.65mil/tonne, while rolled steel is VND9.2mil/tonne.
Analysts said that the overly high ingot steel price has led to the material shortage for steel mills, and the output of finished steel is not enough to satisfy the market.
Le Ngoc Son, Head of the International Cooperation Division under VIS, said that the company has sold out the imported China-made 10,000 tonnes, bearing VIS trademark.
Mr Son said that VIS has not thought of importing more from China this way (ordering Chinese producers to make steel under the VIS trademark and then importing it to sell domestically). The Government of China has decided to remove the scheme on VAT refunds, while imposing 10% on steel exports, which makes China-made steel as expensive as the locally-made product.
Mr Son said that the steel price may increase to VND11mil/tonne due to the increased import price of ingot steel, while local steel mills still rely on ingot steel imports.
Contractors of construction works are weeping over the price hike. Luong Sy Nhung, Director General of the Truong Son Construction Corporation under the Ministry of National Defence, said that the sharp price increases in the last two months have put difficulties on construction projects.
“What worries us most is the material price hike,” Mr Nhung said.
As for some construction works, expenses are fixed and contractors do not have the right to adjust the expenses when the material prices fluctuate. In this case, contractors have to incur losses due to the price hike.
In other works, contractors can adjust the expenses when the material prices fluctuate.
However, contractors still have to pay expenses on account and then ask for the payment from projects’ investors. Mr Nhung said that the complicated procedures for the payment always makes contractors exhausted. In most cases, contractors incur losses from price fluctuations as steel accounts for 25% of total expenses in construction works.
Nghiem Sy Minh, Director General of the Hanoi Construction Corporation, said that the construction pace will slow down as contractors will have to negotiate with investors on the adjustment of expenses.
Source: VNE
According to the Vietnam Steel Association (VSA), its members now sell steel at VND9-9.5mil/tonne (not including VAT). If counting on the 10% VAT, transportation fee, commission for sales agents, customers can purchase steel at VND10-10.5mil/tonne on average, while the price may reach VND11mil/tonne in remote areas.
Steel prices have been rising since mid April 2007. In the north, producers raised the price by VND200-300,000/tonne since the end of May. In the south, the price has been raised by VND150,000-200,000/tonne since the beginning of June.
The south saw the lower price increases compared to the north because the Southern Steel Corporation tried to keep the low selling prices in order to gain the yearly output plan. In the first months of the year, the sales were slow and the corporation tried to offer low prices in a bid to boost sales.
However, once the sales were improved (the corporation could sell 70,000 tonnes in May alone), it began raising the selling price by VND150,000/tonne of rolled steel and VND200,000/tonne of bar steel. The move has been followed by other producers.
The Southern Steel Corporation has announced it would raise the price by another VND200,000/tonne, and the new prices will be applied as of June 20. As such, the bar steel will be priced at VND9.65mil/tonne, while rolled steel is VND9.2mil/tonne.
Analysts said that the overly high ingot steel price has led to the material shortage for steel mills, and the output of finished steel is not enough to satisfy the market.
Le Ngoc Son, Head of the International Cooperation Division under VIS, said that the company has sold out the imported China-made 10,000 tonnes, bearing VIS trademark.
Mr Son said that VIS has not thought of importing more from China this way (ordering Chinese producers to make steel under the VIS trademark and then importing it to sell domestically). The Government of China has decided to remove the scheme on VAT refunds, while imposing 10% on steel exports, which makes China-made steel as expensive as the locally-made product.
Mr Son said that the steel price may increase to VND11mil/tonne due to the increased import price of ingot steel, while local steel mills still rely on ingot steel imports.
Contractors of construction works are weeping over the price hike. Luong Sy Nhung, Director General of the Truong Son Construction Corporation under the Ministry of National Defence, said that the sharp price increases in the last two months have put difficulties on construction projects.
“What worries us most is the material price hike,” Mr Nhung said.
As for some construction works, expenses are fixed and contractors do not have the right to adjust the expenses when the material prices fluctuate. In this case, contractors have to incur losses due to the price hike.
In other works, contractors can adjust the expenses when the material prices fluctuate.
However, contractors still have to pay expenses on account and then ask for the payment from projects’ investors. Mr Nhung said that the complicated procedures for the payment always makes contractors exhausted. In most cases, contractors incur losses from price fluctuations as steel accounts for 25% of total expenses in construction works.
Nghiem Sy Minh, Director General of the Hanoi Construction Corporation, said that the construction pace will slow down as contractors will have to negotiate with investors on the adjustment of expenses.
Source: VNE
Thursday, May 31, 2007
Excess of steel production capacity drawing near
Investors seem to consider Vietnam an ideal place for steel mill projects, which explains why they have brought big projects worth several billion dollars each to Vietnam. However, experts have warned that too many steel mills will lead to waste.
According to the Vietnam Steel Association (VSA), Vietnam now has to import 3.5mil tonnes of steel a year. It is estimated that the total demand for plate steel will be some 4.7mil tonnes by 2010, 7.2mil tonnes by 2015, and 10.2mil tonnes by 2020. The demand for plate steel accounts for 50% of the total demand in Vietnam.
If counting the demand for construction steel, which is expected to see the same growth rate in demand as plate steel, Vietnam will need 10mil tonnes of steel of different kinds by 2010, 15mil tonnes by 2015 and 20mil tonnes by 2020.
Such a big demand can be seen as a big opportunity for investors and the steel industry, which explains why foreign investors are rushing to set up steel mills in Vietnam. However, experts have warned that too heavy of investment in the steel industry will cause waste as supply will exceed demand.
The Vietnam Steel Corporation (VSC) on May 29 signed a memorandum of understanding on the implementation of the $3.5-4bil Ha Tinh steel complex project with India’s Tata group, the sixth-biggest steel group in the world. Once operational, the steel mill will churn out 4.5-5mil tonnes a year.
Another big steel project is waiting for licencing – the one to be run by the joint venture between Korea’s Posco and Vietnam’s Vinashin. The $5bil steel project, expected to be located in Khanh Hoa province, will put out 5mil tonnes a year.
The two projects alone will have the total capacity of 10mil tonnes a year by 2015. If considering the current capacity of 6mil tonnes a year of operational steel mills, and another 6mil tonnes able to be produced by that time, Vietnam will be able to produce 20mil tonnes of steel of different kinds by 2015.
Other big steel projects are to be kicked off in some days. These include the one invested in by Tycoons Group International ($1bil), which was licenced in September 2006. The 2mil tonne/year steel mill invested in by India’s Essar and VSC in Ba Ria-Vung Tau is awaiting a licence. The construction of a series of smaller projects, capitalised at $30-60mil, is to start in some days
Source: VNE
According to the Vietnam Steel Association (VSA), Vietnam now has to import 3.5mil tonnes of steel a year. It is estimated that the total demand for plate steel will be some 4.7mil tonnes by 2010, 7.2mil tonnes by 2015, and 10.2mil tonnes by 2020. The demand for plate steel accounts for 50% of the total demand in Vietnam.
If counting the demand for construction steel, which is expected to see the same growth rate in demand as plate steel, Vietnam will need 10mil tonnes of steel of different kinds by 2010, 15mil tonnes by 2015 and 20mil tonnes by 2020.
Such a big demand can be seen as a big opportunity for investors and the steel industry, which explains why foreign investors are rushing to set up steel mills in Vietnam. However, experts have warned that too heavy of investment in the steel industry will cause waste as supply will exceed demand.
The Vietnam Steel Corporation (VSC) on May 29 signed a memorandum of understanding on the implementation of the $3.5-4bil Ha Tinh steel complex project with India’s Tata group, the sixth-biggest steel group in the world. Once operational, the steel mill will churn out 4.5-5mil tonnes a year.
Another big steel project is waiting for licencing – the one to be run by the joint venture between Korea’s Posco and Vietnam’s Vinashin. The $5bil steel project, expected to be located in Khanh Hoa province, will put out 5mil tonnes a year.
The two projects alone will have the total capacity of 10mil tonnes a year by 2015. If considering the current capacity of 6mil tonnes a year of operational steel mills, and another 6mil tonnes able to be produced by that time, Vietnam will be able to produce 20mil tonnes of steel of different kinds by 2015.
Other big steel projects are to be kicked off in some days. These include the one invested in by Tycoons Group International ($1bil), which was licenced in September 2006. The 2mil tonne/year steel mill invested in by India’s Essar and VSC in Ba Ria-Vung Tau is awaiting a licence. The construction of a series of smaller projects, capitalised at $30-60mil, is to start in some days
Source: VNE
VIS acted lawfully, but action not to be encouraged
The fact that VIS ordered a Chinese steel mill to make steel under the VIS trademark does not violate the law, but this should not be encouraged, the Prime Minister has concluded.
The Government’s office on May 29 released dispatch No 2909, announcing the Prime Minister’s conclusion on the VIS case, responding to the appeal of the Vietnam Steel Association (VSA) about the case.
The Prime Minister said that VIS’s move did not violate the law. However, in the current context, when the steel supply has exceeded the demand, the move has had bad impacts on local production. The Government does not encourage enterprises to follow VIS’s move.
The conclusion by the Prime Minister has put an end to the prolonged dispute on whether VIS violated the law. VIS’s move has been facing strong opposition from local steel producers, who said that the move would kill local production. If all steel producers ordered foreign steel mills to make steel under their trademarks there would be no more steel producers in Vietnam.
Before the Prime Minister gave the final conclusion about the case, the Ministry of Trade and the National Office of Intellectual Property (NOIP) had expressed their viewpoints that VIS’s move was legal. However, VSA, which represents many domestically owned and foreign invested enterprises, did not accept the ministries’ viewpoints, and decided to lodge an appeal directly with the Prime Minister. VSA’s members said that if VIS’s move was tolerated, no investor would inject money in steel projects any more.
The Prime Minister has asked the Ministries of Trade and Finance to consider adjusting taxes on steel in case the overly high imports caused bad influences on local production. The two ministries have also been asked to consider measures to prevent steel dumping, which may affect local production, and prevent price escalation, which is unbeneficial to customers.
The Prime Minister has asked the Ministry of Science and Technologies to instruct the Vietnam Directorate for Standards and Quality (Stameq) to keep strict control over imported steel to ensure the quality of imports.
The General Department of Customs (GDC) has to examine the quality of steel imports at border gates. As for the import of steel which bears Vietnamese trademarks but is produced in other countries, importers will have to show a certificate of product quality granted by competent agencies of these countries.
The Ministry of Trade will be responsible for inspecting the labeling of imported products before they are circulated on the market.
Source: VNE
The Government’s office on May 29 released dispatch No 2909, announcing the Prime Minister’s conclusion on the VIS case, responding to the appeal of the Vietnam Steel Association (VSA) about the case.
The Prime Minister said that VIS’s move did not violate the law. However, in the current context, when the steel supply has exceeded the demand, the move has had bad impacts on local production. The Government does not encourage enterprises to follow VIS’s move.
The conclusion by the Prime Minister has put an end to the prolonged dispute on whether VIS violated the law. VIS’s move has been facing strong opposition from local steel producers, who said that the move would kill local production. If all steel producers ordered foreign steel mills to make steel under their trademarks there would be no more steel producers in Vietnam.
Before the Prime Minister gave the final conclusion about the case, the Ministry of Trade and the National Office of Intellectual Property (NOIP) had expressed their viewpoints that VIS’s move was legal. However, VSA, which represents many domestically owned and foreign invested enterprises, did not accept the ministries’ viewpoints, and decided to lodge an appeal directly with the Prime Minister. VSA’s members said that if VIS’s move was tolerated, no investor would inject money in steel projects any more.
The Prime Minister has asked the Ministries of Trade and Finance to consider adjusting taxes on steel in case the overly high imports caused bad influences on local production. The two ministries have also been asked to consider measures to prevent steel dumping, which may affect local production, and prevent price escalation, which is unbeneficial to customers.
The Prime Minister has asked the Ministry of Science and Technologies to instruct the Vietnam Directorate for Standards and Quality (Stameq) to keep strict control over imported steel to ensure the quality of imports.
The General Department of Customs (GDC) has to examine the quality of steel imports at border gates. As for the import of steel which bears Vietnamese trademarks but is produced in other countries, importers will have to show a certificate of product quality granted by competent agencies of these countries.
The Ministry of Trade will be responsible for inspecting the labeling of imported products before they are circulated on the market.
Source: VNE
Tuesday, May 29, 2007
Tata takes major stake in Vietnam steel plant
India's Tata Steel Ltd. (TISC.BO: Quote, Profile , Research), the world's sixth-largest steel maker, will join forces with state-run Vietnam Steel Corp. (VSC) to build parts of a steel complex with a total $3.5 billion in investment.
Tata will take a stake of up to 65 percent in a steel plant venture with Vietnam and a 30 percent stake in a nearby iron ore mine. Both are part of the complex that Tata will build with VSC, the country's top steel maker.
Tata signed a memorandum of understanding with VSC to conduct a feasibility study by September 2008 on a complex with capacity for 4.5 million tonnes of steel products by 2018.
"The project aims to optimise the resources from Thach Khe iron ore mine in Ha Tinh province to turn out steel products to meet economic demand," VSC Chief Executive Dau Van Hung said.
Hung was referring to the central coastal province of Ha Tinh, 340 km (210 miles) south of Hanoi. The Thach Khe mine is 12 km east of the north-south Highway One, close to the sea.
Its iron ore reserves are estimated at more than 500 million tonnes, which are located deep below sea level, of which around 300 million tonnes would be recoverable, said Pham Chi Cuong, chairman of the Vietnam Steel Association.
"The size of the mine is average, but the ore has a high iron content of more than 60 percent," Cuong told Reuters.
Cuong said the complex would produce steel plate and sheet, which have not been manufactured in Vietnam, one of the world's fastest growing economies but which has to import half its steel product demand, mainly from China.
"The project will serve as the backbone for Vietnam's steel industry during 2015-2020," he said.
Tata Managing Director B. Muthuraman estimated Vietnam's steel product demand at 7 million tonnes a year.
But January to May's imports of steel and billets into Vietnam have already jumped 39.5 percent from a year earlier to 3 million tonnes, government statistics showed.
"The proposed joint venture with Tata Steel for the steel plant shall further strengthen the domestic production of primary steel and lower the dependence of Vietnam on imported billets and slabs," Muthuraman said.
VSC has been running 12 subsidiaries and 14 joint ventures with foreign companies in the industry. It said its total capacity stood at 5 million tonnes of products per year, including the output of its ventures.
In March it secured an investment licence to develop a $527 million hot-rolled steel mill in the southern province of Ba Ria-Vung Tau with India's Essar group and the Vietnam General Rubber group.
Source: Reuters
Tata will take a stake of up to 65 percent in a steel plant venture with Vietnam and a 30 percent stake in a nearby iron ore mine. Both are part of the complex that Tata will build with VSC, the country's top steel maker.
Tata signed a memorandum of understanding with VSC to conduct a feasibility study by September 2008 on a complex with capacity for 4.5 million tonnes of steel products by 2018.
"The project aims to optimise the resources from Thach Khe iron ore mine in Ha Tinh province to turn out steel products to meet economic demand," VSC Chief Executive Dau Van Hung said.
Hung was referring to the central coastal province of Ha Tinh, 340 km (210 miles) south of Hanoi. The Thach Khe mine is 12 km east of the north-south Highway One, close to the sea.
Its iron ore reserves are estimated at more than 500 million tonnes, which are located deep below sea level, of which around 300 million tonnes would be recoverable, said Pham Chi Cuong, chairman of the Vietnam Steel Association.
"The size of the mine is average, but the ore has a high iron content of more than 60 percent," Cuong told Reuters.
Cuong said the complex would produce steel plate and sheet, which have not been manufactured in Vietnam, one of the world's fastest growing economies but which has to import half its steel product demand, mainly from China.
"The project will serve as the backbone for Vietnam's steel industry during 2015-2020," he said.
Tata Managing Director B. Muthuraman estimated Vietnam's steel product demand at 7 million tonnes a year.
But January to May's imports of steel and billets into Vietnam have already jumped 39.5 percent from a year earlier to 3 million tonnes, government statistics showed.
"The proposed joint venture with Tata Steel for the steel plant shall further strengthen the domestic production of primary steel and lower the dependence of Vietnam on imported billets and slabs," Muthuraman said.
VSC has been running 12 subsidiaries and 14 joint ventures with foreign companies in the industry. It said its total capacity stood at 5 million tonnes of products per year, including the output of its ventures.
In March it secured an investment licence to develop a $527 million hot-rolled steel mill in the southern province of Ba Ria-Vung Tau with India's Essar group and the Vietnam General Rubber group.
Source: Reuters
Saturday, May 26, 2007
Vietnam Steel and Tata join for venture
State-run Vietnam Steel Corp. (VSC) is to sign an agreement on May 29 with India's Tata Steel Ltd. for a steel complex, a VSC executive said on Friday.
The government said the total investment would be $3.5 billion.
VSC Chairman Mai Van Tinh said in an invitation sent to Reuters that the Vietnamese firm would sign a memorandum of understanding with Tata on Tuesday in Hanoi, following government approval granted on May 18.
The steel complex, to be built in the central province of Ha Tinh, 340 km (210 miles) south of Hanoi, would refine iron ore from Thach Khe mine to produce 4.5 million tonnes of steel products per year, the government has said.
It was not clear how much of investment each side would contribute to build the complex but the major steel project, along with those planned by South Korea's POSCO, could help Vietnam reduce its reliance on steel imports.
The Hanoi-based unlisted VSC has been running several ventures with foreign companies to expand domestic production.
In March VSC won an investment licence to develop a $527 million hot-rolled steel mill in the southern province of Ba Ria-Vung Tau with India's Essar group and the Vietnam General Rubber group.
Steel and billets imported to Vietnam mainly come from China. Last year Vietnam's imports of the products edged up 1.8 percent from 2005 to 5.62 million tonnes, government statistics said.
However, a robust demand of the construction sector has prompted January-to-May's imports of steel and billets to jump 39.5 percent from a year earlier to 3 million tonnes, the General Statistics Office said on Friday.
The import value would also soar 64.7 percent to $1.7 billion, the office said in its monthly report.
Source: Reuters
The government said the total investment would be $3.5 billion.
VSC Chairman Mai Van Tinh said in an invitation sent to Reuters that the Vietnamese firm would sign a memorandum of understanding with Tata on Tuesday in Hanoi, following government approval granted on May 18.
The steel complex, to be built in the central province of Ha Tinh, 340 km (210 miles) south of Hanoi, would refine iron ore from Thach Khe mine to produce 4.5 million tonnes of steel products per year, the government has said.
It was not clear how much of investment each side would contribute to build the complex but the major steel project, along with those planned by South Korea's POSCO, could help Vietnam reduce its reliance on steel imports.
The Hanoi-based unlisted VSC has been running several ventures with foreign companies to expand domestic production.
In March VSC won an investment licence to develop a $527 million hot-rolled steel mill in the southern province of Ba Ria-Vung Tau with India's Essar group and the Vietnam General Rubber group.
Steel and billets imported to Vietnam mainly come from China. Last year Vietnam's imports of the products edged up 1.8 percent from 2005 to 5.62 million tonnes, government statistics said.
However, a robust demand of the construction sector has prompted January-to-May's imports of steel and billets to jump 39.5 percent from a year earlier to 3 million tonnes, the General Statistics Office said on Friday.
The import value would also soar 64.7 percent to $1.7 billion, the office said in its monthly report.
Source: Reuters
Wednesday, May 16, 2007
Steel company to issue additional shares
SMC Trading and Investment Joint Stock Company – a listed steel manufacturer and supplier – is set to issue four million shares to increase its chartered capital to VND100 billion from the current VND75 billion. The issue is scheduled in late June.
As planned, SMC will offer 1.5 million bonus shares to existing shareholders at the ratio of one new share for every four held. The company will sell an additional 1.5 million shares to the shareholders at the ratio of 1:5 at the price of VND20,000 each.
The company will offer 300,000 shares at VND30,000 each to its staff and the remaining 700,000 shares to SMC’s strategic partners at VND40,000 each.
The mobilized capital will be used to invest in the company’s VND225 billion steel mill, which is expected to come on line in Ba Ria – Vung Tau Province late next year.
The raised funds will also be used to buy stakes in local steel plants as short-term investment.
In the first four months of the year the SMC obtained VND727 billion in turnover and nearly VND12 billion in pre-tax profits, accounting for 40 percent of the its plan this year.
Last year, it earned VND1.92 trillion in turnover and VND22.67 billion in pre-tax profits.
Source: Thanh Nien
As planned, SMC will offer 1.5 million bonus shares to existing shareholders at the ratio of one new share for every four held. The company will sell an additional 1.5 million shares to the shareholders at the ratio of 1:5 at the price of VND20,000 each.
The company will offer 300,000 shares at VND30,000 each to its staff and the remaining 700,000 shares to SMC’s strategic partners at VND40,000 each.
The mobilized capital will be used to invest in the company’s VND225 billion steel mill, which is expected to come on line in Ba Ria – Vung Tau Province late next year.
The raised funds will also be used to buy stakes in local steel plants as short-term investment.
In the first four months of the year the SMC obtained VND727 billion in turnover and nearly VND12 billion in pre-tax profits, accounting for 40 percent of the its plan this year.
Last year, it earned VND1.92 trillion in turnover and VND22.67 billion in pre-tax profits.
Source: Thanh Nien
Tuesday, May 15, 2007
Construction material prices rising
Construction material producers all are planning to raise their selling prices to cover the higher input material prices.
Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA), said that the steel price keeps high, though the offered ingot steel has slightly decreased in the last couple of weeks. Explaining this, Mr Cuong said that steel mills now still use the ingot steel imported at high prices in the first quarter of the year.
In the north, round steel of the Thai Nguyen Cast Iron and Steel Company is selling at VND9,100/kg, while joint venture steel companies are offering at VND9,200/kg. In the south, the Southern Steel Corporation is selling round steel at VND9,150/kg, rolled steel at VND8,850/kg, while VinaKyoei at VND9,220/kg, and VND9,030/kg respectively.
The cement price has also been sharply increasing. In April, the sold volume of cement reached 3.5mil tones, according to the Vietnam Cement Association, raising the total consumed volume of cement in the first four months of the year to 11.18mil tones. The cement price stays at VND770,000-835,000/tonne in the north, and VND880,000-1mil/tonne in the south.
However, the prices of these products are bound to increase as the input material prices (coal, electricity, petrol) have increased.
Nguyen Van Nam, Director General of the Hoang Thach Cement Company, said that the higher input material prices have made the cement production cost increase by VND25-30,000/tonne. Meanwhile, the recent petrol price hike, which has caused the higher transport fee, has also put difficulties for cement producers. Hoang Thach’s cement is now selling at VND720,000/tonne (PCV 30) and VND750,000/tonne (PCV 40).
As the input material prices have increased in the last time, the HCM City People’s Committee has recently made the decision on allowing local enterprises to adjust the selling prices of steel and cement spontaneously. Local enterprises would be allowed to lower or raise the prices by 5% compared to the price levels announced by the HCM City Departments of Construction and Finance.
According to Mr Cuong from VSA, the ingot steel in stock by the end of April has reached 300,000 tonnes, enough to meet the demand for the production in May and June. The inventory finished steel is reportedly at 260,000 tonnes.
Experts said that the fact that China removes the scheme on 8% VAT refund to exporters would limit the exports of finished steel products to Vietnam. Less China-made steel would be imported to Vietnam as the product would be $35/tonne more expensive. As China-made steel would not be a big rival any more, local steel producers would be free raise the selling prices, which they have planned for a long time.
As for cement, though the inventory cement and clinker remain high at 2.1mil tones, and producers have promised to provide enough cement for the last months of the second quarter, the Taskforce on Domestic Market Monitoring has predicted that the cement price would increase in the second quarter.
According to the Vietnam Cement Corporation, the demand for cement would increase in the second quarter, the high construction season, estimated to reach 10-11mil tones. However, cement would not see sharp price increase as more cement plants will become operational in the time to come, ensuring the profuse supplies to the market.
Source: VNE
Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA), said that the steel price keeps high, though the offered ingot steel has slightly decreased in the last couple of weeks. Explaining this, Mr Cuong said that steel mills now still use the ingot steel imported at high prices in the first quarter of the year.
In the north, round steel of the Thai Nguyen Cast Iron and Steel Company is selling at VND9,100/kg, while joint venture steel companies are offering at VND9,200/kg. In the south, the Southern Steel Corporation is selling round steel at VND9,150/kg, rolled steel at VND8,850/kg, while VinaKyoei at VND9,220/kg, and VND9,030/kg respectively.
The cement price has also been sharply increasing. In April, the sold volume of cement reached 3.5mil tones, according to the Vietnam Cement Association, raising the total consumed volume of cement in the first four months of the year to 11.18mil tones. The cement price stays at VND770,000-835,000/tonne in the north, and VND880,000-1mil/tonne in the south.
However, the prices of these products are bound to increase as the input material prices (coal, electricity, petrol) have increased.
Nguyen Van Nam, Director General of the Hoang Thach Cement Company, said that the higher input material prices have made the cement production cost increase by VND25-30,000/tonne. Meanwhile, the recent petrol price hike, which has caused the higher transport fee, has also put difficulties for cement producers. Hoang Thach’s cement is now selling at VND720,000/tonne (PCV 30) and VND750,000/tonne (PCV 40).
As the input material prices have increased in the last time, the HCM City People’s Committee has recently made the decision on allowing local enterprises to adjust the selling prices of steel and cement spontaneously. Local enterprises would be allowed to lower or raise the prices by 5% compared to the price levels announced by the HCM City Departments of Construction and Finance.
According to Mr Cuong from VSA, the ingot steel in stock by the end of April has reached 300,000 tonnes, enough to meet the demand for the production in May and June. The inventory finished steel is reportedly at 260,000 tonnes.
Experts said that the fact that China removes the scheme on 8% VAT refund to exporters would limit the exports of finished steel products to Vietnam. Less China-made steel would be imported to Vietnam as the product would be $35/tonne more expensive. As China-made steel would not be a big rival any more, local steel producers would be free raise the selling prices, which they have planned for a long time.
As for cement, though the inventory cement and clinker remain high at 2.1mil tones, and producers have promised to provide enough cement for the last months of the second quarter, the Taskforce on Domestic Market Monitoring has predicted that the cement price would increase in the second quarter.
According to the Vietnam Cement Corporation, the demand for cement would increase in the second quarter, the high construction season, estimated to reach 10-11mil tones. However, cement would not see sharp price increase as more cement plants will become operational in the time to come, ensuring the profuse supplies to the market.
Source: VNE
Friday, May 04, 2007
Vietnam Steel raises 25 million US$ by selling bonds
State-owned Vietnam Steel Corp. aims to raise 400 billion dong (nearly $25 million) in a dong bond issue scheduled for May 10, bond underwriter Vietcombank said on Friday.
The 5-year bonds, with a face value of 100,000 dong, would carry an annual coupon of 9.5%, Vietcombank said in a statement.
Vietnamese companies have been switching to bonds as bank loans usually carry an annual interest of 12 to 15%.
Source: Reuters
The 5-year bonds, with a face value of 100,000 dong, would carry an annual coupon of 9.5%, Vietcombank said in a statement.
Vietnamese companies have been switching to bonds as bank loans usually carry an annual interest of 12 to 15%.
Source: Reuters
Thursday, March 22, 2007
Hard competition from China for Vietnamese steel industry
Vietnam, which has been importing semifinished steel billet from China, could soon import finished steel from that country to make up a massive shortfall in billets that has sent production costs skyrocketing.
With domestic plants meeting only 50 percent of demand for semifinished steel of around four million tons per year, Vietnam imports large quantities from China. But China plans to increase billet prices to 500 US$ per ton soon.
If that happens Vietnamese steelmakers fear that steel prices will go over VND10 million (624 US$) per ton after having spiked to VND9.3 million last January from VND8.3 million earlier.
The Vietnam-based Italia Steel Company is already planning to buy 5,000 tons of finished steel from China.
But there is an outcry from Vietnamese steelmakers.
Hoang Anh Dung, marketing manager of the Vietnam Steel Company, warned the move would have grave consequences on the domestic steel industry and cause unhealthy competition.
He also expressed a fear that the Vietnamese steel industry could be gobbled up by its Chinese counterpart if more steel companies opted to import from China.
Dung also warned about the poor quality of steel products of dubious origin imported from China.
Source: Thanh Nien
With domestic plants meeting only 50 percent of demand for semifinished steel of around four million tons per year, Vietnam imports large quantities from China. But China plans to increase billet prices to 500 US$ per ton soon.
If that happens Vietnamese steelmakers fear that steel prices will go over VND10 million (624 US$) per ton after having spiked to VND9.3 million last January from VND8.3 million earlier.
The Vietnam-based Italia Steel Company is already planning to buy 5,000 tons of finished steel from China.
But there is an outcry from Vietnamese steelmakers.
Hoang Anh Dung, marketing manager of the Vietnam Steel Company, warned the move would have grave consequences on the domestic steel industry and cause unhealthy competition.
He also expressed a fear that the Vietnamese steel industry could be gobbled up by its Chinese counterpart if more steel companies opted to import from China.
Dung also warned about the poor quality of steel products of dubious origin imported from China.
Source: Thanh Nien
Saturday, March 17, 2007
SMC inaugurates steels factory
The SMC Investment Trading Joint Stock Company (SMC.VSE) )inaugurated a 44 billion VND (2.75mio US$) steel factory in Phu My 1 Industrial Park (IP) in the southern coastal province of Ba Ria-Vung Tau on Mar. 16.
Covering 2.1 hectares, the SMC Phu My Steel Factory has an annual output of 30,000 tonnes of products which are used in construction, shipbuilding, bridge engineering and electrical industries.
SMC is also carrying out a project worth 200 billion VND (12.5mio US$) to build a mechanical manufacturing factory in the Phu My 1 IP.
The project is expected to become operational in late 2008 to meet growing demands for mechanical-steel products both at home and abroad.
The company sold 250,000 tonnes of steel last year and has targeted to hold 4.5-5% of the domestic market share by 2010 (around 450,000-500,000 tonnes).
Source: VNA
Covering 2.1 hectares, the SMC Phu My Steel Factory has an annual output of 30,000 tonnes of products which are used in construction, shipbuilding, bridge engineering and electrical industries.
SMC is also carrying out a project worth 200 billion VND (12.5mio US$) to build a mechanical manufacturing factory in the Phu My 1 IP.
The project is expected to become operational in late 2008 to meet growing demands for mechanical-steel products both at home and abroad.
The company sold 250,000 tonnes of steel last year and has targeted to hold 4.5-5% of the domestic market share by 2010 (around 450,000-500,000 tonnes).
Source: VNA
Friday, March 16, 2007
Does VIS violate the law?
Arguments have been raised over the legitimacy of the Vietnam-Italia Steel Joint Venture Company’s (VIS), listed at HCMC stock exchange, plan to order Chinese steel mills to make steel under VIS trademark. The steel will be imported to Vietnam for domestic consumption.
VIS’ plan has been facing strong opposition from local steel producers, who said that this is the violation of the laws, while VIS has insisted that it is legal.
Le Ngoc Son, Head of the International Cooperation Division under VIS, said that there are four factors leading to the company’s decision to place orders with Chinese steel producers.
First, the ingot steel prices keep skyrocketing in the domestic market, at VND8,800/kg, while in China, the price is just at VND8,200-8,900/kg. With the price gap of VND500,000/tonne in ingot steel, local producers will suffer heavy losses if they make steel domestically. This has prompted VIS to find out new ways of business in order to minimise risks.
Second, the steel price in Chinese market is staying at high levels as the world has put pressure on the country, forcing Chinese producers to reduce steel output by shutting down a lot of mills in order to improve the environment pollution. As the result, the steel supplies have decreased, leading to higher prices of finished steel.
Third, according to Mr Son, there are no reasons for local producers to condemn VIS, as the company just provides only 180,000 tonnes of steel every year to the domestic market. Therefore, the VIS’ said plan would not badly affect the operation of other steel mills.
Fourth, VIS wants to order C3 steel product with big diameter, which will be provided to high-rise buildings’ investors, the big clients of VIS.
However, all local steel producers have raised strong protests against the argument. The Thai Nguyen Cast Iron and Steel Company, Nam Do, Vinakansai and Vinashin all said that they have been asked by Chinese steel mills to make and distribute steel in this way, but they have rejected.
Representative from Pomina Company said: “The order of 5,000 tonnes would not have impact in the short term, but would be the threat to the whole steel industry in the long term”.
The representative pointed out that this is a kind of counterfeiting goods, and this must be prevented right now. He stressed that this must not considered as a kind of doing outwork. If Chinese producers do outwork for VIS, they must use the material provided by VIS. Meanwhile, in this case, 100% of material and technology are Chinese and the product is made in China.
Commenting about the legitimacy of VIS’ move, Tran Anh Son, Deputy Head of the Competition Management Administration under the Ministry of Trade said that in fact, this is a 100% Chinese made product, which is labelled with VIS trademark.
Mr Son, referring to the Dispatch No 548 promulgated by the Government, said that in case a company commissions a foreign company to make a product and then imports the product back to Vietnam, only the production steps that cannot be made domestically would be allowed to be made abroad.
An official from the Ministry of Industry has warned that there latent big risks in the VIS’ plan. In the first phase of the market access, the producer will sell at low prices, and after that, when its product becomes familiar to consumers, it will raise the selling prices. As the result, the foreign made product will dominate the market and kill local production.
Source: VEN
VIS’ plan has been facing strong opposition from local steel producers, who said that this is the violation of the laws, while VIS has insisted that it is legal.
Le Ngoc Son, Head of the International Cooperation Division under VIS, said that there are four factors leading to the company’s decision to place orders with Chinese steel producers.
First, the ingot steel prices keep skyrocketing in the domestic market, at VND8,800/kg, while in China, the price is just at VND8,200-8,900/kg. With the price gap of VND500,000/tonne in ingot steel, local producers will suffer heavy losses if they make steel domestically. This has prompted VIS to find out new ways of business in order to minimise risks.
Second, the steel price in Chinese market is staying at high levels as the world has put pressure on the country, forcing Chinese producers to reduce steel output by shutting down a lot of mills in order to improve the environment pollution. As the result, the steel supplies have decreased, leading to higher prices of finished steel.
Third, according to Mr Son, there are no reasons for local producers to condemn VIS, as the company just provides only 180,000 tonnes of steel every year to the domestic market. Therefore, the VIS’ said plan would not badly affect the operation of other steel mills.
Fourth, VIS wants to order C3 steel product with big diameter, which will be provided to high-rise buildings’ investors, the big clients of VIS.
However, all local steel producers have raised strong protests against the argument. The Thai Nguyen Cast Iron and Steel Company, Nam Do, Vinakansai and Vinashin all said that they have been asked by Chinese steel mills to make and distribute steel in this way, but they have rejected.
Representative from Pomina Company said: “The order of 5,000 tonnes would not have impact in the short term, but would be the threat to the whole steel industry in the long term”.
The representative pointed out that this is a kind of counterfeiting goods, and this must be prevented right now. He stressed that this must not considered as a kind of doing outwork. If Chinese producers do outwork for VIS, they must use the material provided by VIS. Meanwhile, in this case, 100% of material and technology are Chinese and the product is made in China.
Commenting about the legitimacy of VIS’ move, Tran Anh Son, Deputy Head of the Competition Management Administration under the Ministry of Trade said that in fact, this is a 100% Chinese made product, which is labelled with VIS trademark.
Mr Son, referring to the Dispatch No 548 promulgated by the Government, said that in case a company commissions a foreign company to make a product and then imports the product back to Vietnam, only the production steps that cannot be made domestically would be allowed to be made abroad.
An official from the Ministry of Industry has warned that there latent big risks in the VIS’ plan. In the first phase of the market access, the producer will sell at low prices, and after that, when its product becomes familiar to consumers, it will raise the selling prices. As the result, the foreign made product will dominate the market and kill local production.
Source: VEN
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