The Vietnam Steel Association has urged authorities not to go ahead with 27 planned steel plants since local output is already more than twice the demand.
The association has proposed related authorities to revoke the licenses of 27 projects, some of which have not been started while others have proved impractical or are using outdated technology.
Do Duy Thai, vice chairman of the association, told Thoi bao Kinh te Saigon Saturday that the output of steel rods has risen to as high as 11 million metric tons while the consumption has been around five million tons and is expected to rise to nearly six million tons this year.
The quantity of steel billets and steel roofs is also 1.5 to two times the demand.
The supply-demand gap is “unreasonably large,” he said
“We want the government to eliminate unsuitable projects.”
He said the supply surplus should be contained at 30 percent like in other countries so that the industry can continue to grow.
The association said at a meeting with local businesses last week that the proposal aims to limit the number of foreign invested projects.
It said foreign investors, especially those from China, can take over the market with their strong financial and technical capabilities, if the government does not protect the local industry.
This is not the first time the association has sought government intervention: Late last year too it had asked the Ministry of Industry and Trade to examine steel projects and eliminate inefficient ones.
Many companies have complained about losses and stopped production since they lacked the financial and technical capacity to take on the harsh competition, insiders said.
Pham Chi Cuong, former chairman of the association, blamed the massive supply situation on the lack of a development plan from the government, which left many cities and provinces issuing a slew of licenses.
“The rush to invest has caused a waste,” he said.