Steel prices surge ahead of tariffs

A production line for long steel products at Thai Nguyen Iron and Steel JSC in the northern province of Thai Nguyen. Local steel prices have seen a surge due to the temporary safeguard measures that will take effect on March 22. - VNA/VNS Photo Hoang Nguyen

Domestic steel prices have reported an increase by VND250,000 (US$12) per metric tonne. Currently, the steel price is at VND8.9 to VND9 million a tonne.

The surge is a result of the temporary safeguard measures that will take effect on March 22 that could see a rise in the price of imported steel prices.

The Ministry of Industry and Trade (MoIT) on March 8 announced additional tariffs on imported steel products as a temporary safeguard against inexpensive imports that were allegedly threatening the domestic industry.

As per the Decision No 862/QD-BCT issued by the ministry, it will impose temporary safeguard duties of 23.3 per cent on steel billets and 14.2 per cent on long steel products for a maximum of 200 days.

On December 25, 2015, the MoIT issued Decision No 14296/QD-BCT on a safeguard investigation into imports of steel billets and long steel products, based on a complaint lodged by local producers Hoa Phat Steel Joint Stock Company (JSC), Southern Steel Co Ltd, Thai Nguyen Iron and Steel JSC and Viet Nam-Italy Steel JSC.

The four domestic steelmakers, who collectively account for 34.2 per cent of the country's total supply, said their production had been affected by cheaper imports.

Viet Nam Steel Association (VSA) has asked its member producers to have suitable production plans in place as well as keeping selling prices stable.

VSA added that the temporary safeguard measures on steel billets and long steel products has been useful under international regulations to prevent flooding of imported steel into Viet Nam.

The association statistics showed that in February, the steel output of its members rose by 69 per cent to 1.16 million tonnes as compared with the same period last year. Steel consumption last month was more than 918,000 tonnes or 70 per cent year-on-year increase. Steel exports reached 178,000 tonnes, posting 15 per cent rise from last year.

Nguyen Van Sua, VSA's deputy chairman told Tuoi tre (Youth) newspaper that it was unreasonable for the safeguard to affect market-driven steel prices as Viet Nam's steel supply is exceeding demand.

Sua said steel businesses could only increase their price if the raw materials are imported in the time of the safeguard takes effect.