The consumption of steel and cement is expected to grow 10% this year as economic recovery will drive up the construction sector, said the Ministry of Industry and Trade.
In a report issued last Friday, the ministry projected the demand for various types of steel to rise 10% to 6.5 million tons in 2011, while cement consumption is expected to increase 9% to 56 million tons.
According to the Vietnam Steel Association, the country consumed a total amount of some 6.1 million tons of construction steels last year, an increase of 15% from 2009.
In 2010, the country also consumed over 50 million tons of cement, increasing 10% over the previous year.
In its report, the ministry also observed that steel prices fluctuated wildly in 2010 due to changes of input costs like higher power and fuel prices, interest rates, and material costs.
By the end of 2010, the price of construction steel in the market was some VND16.2 million a ton inclusive of value-added tax, an increase of 31% compared to 2009.
The ministry also said dozens of new manufacturers, especially in the steel industry, will be operational this year to meet the increasing demand. These include a production expansion of Thai Nguyen Steel, and new projects by Lao Cai, Thach Khe, Thong Nhat and Southern Steel companies.
For instance, the second phase of Thai Nguyen Steel with annual capacity of some 500,000 tons is expected to start its production by the end of this year.
TATA Group from India is also working with Ha Tinh Province authorities for an investment license to build a steel complex project there with a total investment of around US$5 billion to produce 4.5 million tons of steel products each year.
The ministry also said the steel market would see tougher competition this year due to imported steel products from ASEAN countries that will be enjoying an import tariff of 0%, as well as other cheap steel products from China.
Predicting changes on the market this year, Do Duy Thai, general director of Thep Viet Corp., told the Daily on Monday that prices would increase due to higher input costs.
“With the current interest rate charged by banks at between 17-18%, plus a 20% increase in prices of imported steel ingots and steel scraps as materials since mid-December, I think local steel producers will increase the selling price of steel products in the market to avoid lost,” he said.
Thep Viet has just decided to cut down on shipments to some nearby countries such as Cambodia and Laos by 50% because of higher steel production costs.
He added that Thep Viet used to export some 8,000 tons of steels to Cambodia each month, but the company has slashed the export volume by half to around 4,000 tons to this nearby market each month now.
For cement production, according to the Vietnam Cement Association, the country will have ten new cement plants operational this year to provide an extra capacity of 15 million tons for the market, raising the annual cement output to 65.8 million tons.
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