Vietnamese Ministry of Industry in struggle of controlling steel prices
As previously reported by SteelOrbis, in Vietnam certain measures were taken by the government to stabilize steel prices in the country as the global steel prices were on the rise. For instance, import duties on ingots and certain steel products were reduced to 0% level to be effective as of March 1, 2004. However certain steel related organizations and steel producers claiming that industry has been negatively affected by cheap imports demanded government to increase the subject duties. In fact certain analysts, before the government made the decision to reduce the duties, claimed that government measures to reduce the duties to the level of 0% to stabilize prices was unnecessary as most of the Vietnamese steel producers have not adjusted their prices to reflect global steel prices. They even reported high profits during the subject period despite lower price levels. SteelOrbis reported back in June that Vietnam Ministry of Finance increased the duties on imported steel products because it was thought that an increase in the duties would not lead to an increase in the prices since the supply of steel was sufficient for domestic market. However, steel prices in Vietnam have started to follow an upward trend, which affected construction projects in the country negatively, especially those of the private sector. Now in Vietnam, rising steel prices create concern among steel users especially in construction sector. Upon these developments, two solutions put forward have been discussed currently. One is reducing the import duties on ingots and certain steel products to prevent prices from going up further. However certain analysts are of the opinion that this may injure the domestic steel industry. The second solution is to establish a reserve fund for ingots so that ingots may be sold at a lower rate than the global prices.