Vietnam steel price surge continues

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Contractors and steel retailers are complaining that producers and distributors are raising prices to unreasonable levels, with hikes occurring almost every day this month.

The months after Tet are seen as prime construction time in Vietnam, but steel retail prices increased nearly VND2 million (US$105) a ton in the first 20 days of March. Distributors are blaming steel manufacturers, who are in turn blaming rising material and production costs.

Minh Khoa Construction, Ltd. in Tan Binh District, Ho Chi Minh City, said its steel distributor had recently raised prices by VND100,000 per ton. After the increase, the distributor then called Minh Khoa director Bui Hoang Trieu to say that if he didn't agree to the new price, he would then have to pay more later as the supplier was about implement another VND900,000/ton hike. The distributor said producers were the cause of the hike.

Since March 2, Minh Khoa has seen its prices raised five times, to VND14.6 million per ton on roll steel and VND14.7 million a ton of bar steel.

"This is increase is too quick," Trieu said. "[Constructors and steel retailers] are shocked and don't know what the appropriate prices should be."

The price hikes have raised the cost of constructing a 500 square meter house by more than VND50 million, Trieu said.

Ngoc Loan, who runs a steel shop in Binh Thanh District, said she bought steel at up to VND13.69 million a ton on Monday evening but had to pay VND14.15 million a ton the next morning.

"I bought it high, I will sell it high," Loan said.

Distributors have been accused of taking advantage of the situation as they have in fact hiked prices more frequently than producers and have set prices VND800,000-900,000 than producers.

Many producers have cited the rising cost of steel billet imports, the weakening dong and higher prices of power and gas as reasons for the increases.

Do Duy Thai, general director of Pomina, which produces steel in the southern province of Binh Duong, said the company only raised its price by VND600,000-700,000 a ton this month to VND13.7 million a ton. But its products are being retailed at VND14.6 million a ton, Thai said.

But a sales manager working for Pomina distributor Vina Kyoei and Southern Steel (SS) blamed steel producers for making it seem like there was a lack of goods. She didn't want to be named. She said her firm agreed to pay higher prices but was only able to secure a small amount.

However, Vietnam Steel Association in early March said Vietnam had around 430,000-450,000 tons of steel billet, enough for production until April, plus around 300,000 tons of steel.

Nguyen Tien Nghi, vice chairman of the association, said it's time authorities investigated steel pricing.

"The current steel distribution system has too many tiers. With each level eating one part of the money, consumer steel prices will never be suitable," Nghi said.

"Everyone sees that problem but it has yet to be solved."

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