Import buffer to help struggling steel firms

October 23, 2012 | 10:22

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The government is looking to come into bat to help struggling local steel makers.

Raising import tariffs on stainless cold-rolled steel products from 5 to 7 per cent is on the cards with the Ministry of Finance collecting comments to amend its Circular 157/2011/TT-BTC on preferential import and export tariffs.

An Sung Gu, chief representative of Posco-South Asia Hanoi, in a letter sent to the Government Office recently proposed it double the import tax rate on stainless cold-rolled steel products from 5 to 10 per cent to help domestic firms fight against cheap imports.

Gu said domestic firms’ total annual output of stainless cold-rolled steel reached 3.47 million tonnes annually, while domestic demand was only 1.3 million tonnes per year. That meant a big supply surplus. Despite a 5 per cent tax rate, stainless cold-rolled steel was imported into Vietnam at low prices and easily.

Dinh Huy Tam, general secretary of the Vietnam Steel Association (VSA), said in addition to Posco, other Vietnam steel-makers faced tough times due to imported steel.

Vietnam imported 440,000 and 228,000 tonnes of stainless cold-rolled steel in 2010 and 2011, respectively. This was despite the stainless cold-rolled steel tax rate revised up to 5 per cent in January, 2012 from 0 per cent. The volume of this product imported into the nation was 50,000 tonnes from January to May, according to VSA.

Gu said that ASEAN countries, especially Indonesia, Thailand, Malaysia had tightened the import of steel products through applying non-tariff barriers for imported steel products. The non-tariff barriers included greater documentation for applications, sampling inspection for each import, and auditing of importer or manufacturer. It often took 40 to 60 days to get an import permit, Gu wrote.
By contrast, “the process of imports into Vietnam is very simple,” he stressed, including no auditing requirements.

The Ministry of Industry and Trade said that the country would see the supply of steel products be 1.5-1.8 times greater than demand in 2015. Vietnam-based steel firms will have overall manufacturing capacity of 35.3 million tonnes per year in the next five years, while demand will be only around 15 million tonnes.