Posco sends out an SOS

The firm is proposing the government immediately impose a 10 per cent import tax from January 2012 to protect local production. In a document sent by Posco VST to relevant governmental authorities, the firm said its products could not compete with cold-rolled stainless steel imported from China and other countries as the current import tax is zero.

According to Posco VST, about 140,000 tonnes of stainless steel were imported in Vietnam in 2010. As enjoying zero per cent tax, the imported product controlled local market and pushed Posco VST into trouble.

“We are afraid of that the only cold-rolled stainless steel in Vietnam could have to reduce production, cut jobs, or even shut down production,” the firm said in the document, adding that many Asian countries like Thailand, Indonesia and the Philippines are imposing import tax for stainless steel from 3-7.5 per cent.

In October 2011, Vietnam Steel Association also proposed the government to raise import tax to 10 per cent for stainless steel, but the proposal was not approved. The increase of import tax “will ensure a fair competition between domestic stainless steel and imported stainless steel,” Posco VST said in the document.

Posco VST is now operating a factory in southern Dong Nai province with the total annual capacity of 85,000 tonnes. In 2010, the firm manufactured 77,000 tonnes of products, gaining $200 million of revenue.

The firm also decided to build a new $130 million factory in the province that could manufacture 150,000 tonnes of stainless steel each year. This new factory is expected to be operational in 2012. It estimated once the new factory went into operation, it could satisfy 70 per cent of total demand for stainless steel in Vietnam.