Steel prices, output to increase in 2011

HA NOI — Both the domestic steel price and output would increase in 2011, said Pham Chi Cuong, chairman of the Viet Nam Steel Association （VSA）, at a conference on the tasks of the Viet Nam Steel Corporation in 2011 on Monday.

Cuong said in 2011, Viet Nam had a target of 7-7.5 per cent GDP （Gross Domestic Products） growth which meant many large investment projects would be carried out, including infrastructure construction, civil and industrial works.

"As a backbone construction material, steel production and consumption will have to increase in order to meet growing demand from the construction industry," Cuong said.

According to the VSA, steel output and consumption in 2011 will increase from 8-10 per cent compared to the previous year, and while production and consumption of the material is expected to reach 6 million tonnes this year, Viet Nam is expected to be able to produce only 60 per cent of that total, and will have to import a further 2 million tonnes.

However, if power supply was not guaranteed, the production of steel ingots, which consumes five times more power than steel production （about 500-600 kWh/tonne）, would decline, Cuong said, noting businesses would then be forced to import more ingots to meet domestic demand.

He also said that steel prices were likely to increase this year.

"The prices of two basic materials needed for steel production - coal and iron ore - have risen sharply since December, due to restrictions from major exporting countries such as Brazil, Australia, India and China," Cuong said.

With such increased input costs, domestic steel prices would inevitably rise this year, he said, adding that scrap steel would also increase by US$100 per tonne from this month.

Viet Nam Steel Corporation （VNSteel） deputy general director Le Vu Hung said the price hike would also come as a result of internal factors such as high borrowing interest rates, fluctuating foreign exchange rates, and the rising price of electricity in 2011.

Hung said the corporation would enhance investment and speed up project implementation to ensure production would meet market demand, as well as boost exports.

In 2011, VNSteel expects to produce about 2.9 million tonnes of rolled steel and 1.25 million tonnes of steel ingots.

Last year, the corporation's total industrial production value reached more than VND12.36 billion （$588.7 million）, a year-on-year increase of 5.4 per cent and surpassing annual target.

Its production reached almost 2.4 million tonnes, accounting for 48.8 per cent of the VSA's total output, and steel consumption reached over 2.38 million tonnes, equivalent to 50.7 per cent of the VSA's total figure.