Reeling steel industry can recover: expert

In an interview with VietnamPlus Newswire, Cuong said the crisis would eliminate ineffective steel manufacturers and outdated technology.

“Restructuring is inevitable and only really capable manufacturers can overcome this hard time and develop further,” he said.

Cuong said steel consumption last month fell by 100,000 tonnes against August to only 385,000 tonnes while the figure this month was expected to plunge to 300,000 tonnes.

He said the decline in the construction market was the main cause.

He said that the unsold inventory also rose with the declined consumption, with the current index recorded at 350,000 tonnes a month, doubling the usual figure.

Though the unsold inventory index has yet to reach the alarming rate, what is actually threatening the industry is that the current rate will remain high for several months to come, he said.

“Worse yet, since steel manufacturers are facing low consumption at a time when lending rates are high, they have to lose more on clearing banks interest,” Cuong said.

“A tonne of unsold steel will cost a business an interest of up to VND300,000.”

He said many businesses thus had to cut production by up to 70 per cent to curb the rising unsold inventory.

Some manufacturers have even shut down production.

“Even when they can sell all of the unsold products, some businesses still cannot afford to pay for labor wages, let alone clearing bank loans.”

He said while most manufacturers had opted to cut production to survive the crisis, some had sought ways to export their products.

Steel exports are expected to reach $1.4 billion from January to October this year and $1.8 billion for the whole year.

“The Vietnam Steel Association will ask the Ministry of Industry and Trade to assist steel manufacturers to overcome difficulties,” he said.