The Ministry of Industry and Trade has asked provincial authorities to stop licensing new steel projects with the industry group saying there is a huge surplus in production capacity, the Lao Dong newspaper reported Tuesday.
According to the Vietnam Steel Association, existing steel plants are capable of producing 6 million tons of steel billets a year, but last year they operated at just 60 percent of their capacity. The country's steel output has already reached 9 million tons a year, surpassing local demand by more than 3 million tons.
The Lao Dong also reported that steel stockpiles are growing because of slow sales. The Vietnam Steel Corporation, for instance, sold 169,000 tons of steel last month, down 3,500 tons from March. Steel consumption as fallen partly due to cuts in public investment, the paper said.
The Ministry of Industry and Trade said around 100 steel projects have been licensed in the country and it was high time to revise the licensing process for new ones.
It said it will request the government to revoke the licenses of all steel projects that have been delayed without justification.