Oversupply, anti-dumpting duties threats hit hard at Vietnam steel industry

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The Vietnamese steel industry is caught between a rock and a hard place as oversupply at home has been pushing producers into export markets, where they have been warned of anti-dumpting duties.

In a Saigon Times report, Dinh Huy Tam, general secretary of the Vietnam Steel Association (VSA), said that exports of steel products have increased rapidly, which has caused importing countries to grow more cautious.

Vietnam last year shipped abroad 2.3 million tons of steel for US$2.03 billion.

Indonesia last December slapped 13.5-36.6 percent anti-dumpting taxes on Vietnam's cold rolled steel coils. Vietnam's galvanized iron and color coating iron are also named in lawsuits over anti-dumping duties in Malaysia and Thailand.

If Vietnamese steel mill lost the lawsuits, these countries could impose taxes of between five and 20 percent on the products, which are currently exempt from duties.

Tam said exporting is a "compulsory" step for firms to take due to the shrinking demand in domestic market, but they will be exposed to the threat of anti-dumpting duties.

He advised steel producers to seek for more markets and promote trading agreements.

Sales of  the steel industry last year slightly increased by 3 percent and Pham Chi Cuong, chairman of VSA, said the figure does not look "too sad" if compared with other industries in times of economic crisis.

But Cuong was concerned about the construction steel sector, which suffered the most from the falling local demand due to the prolonged slump of the property market. The segment reported a 10 percent decrease in sales last year.

Many construction steel factories have been operating at less than 60 percent of capacity or even were temporarily closed.

But five more mills are set to launch later this year to bring the total annual supply of construction steel to 11 million tons, twice as high as the local demand, according to VSA vice chairman Nguyen Tien Nghi.

Meanwhile, the supply of cold rolled steel coil has tripled the local demand, the Saigon Times website report, citing a VSA statement.

The authorities' oversight and lack of proper assessment before granting approval to steel projects has caused the supply to surpass demand, it said.

The steel association expects sales of the industry to grow the same 2-3 percent last year as difficulties continue.

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