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NEWS UPDATES 8 September 2010

Rising steel prices surprise Vietnam

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The domestic steel market has surprised those who believed that prices would remain unchanged in August and start to increase in September.

In August alone the industry saw an increase in both price and volume, with steel manufacturers announcing five price increases within the month. Prices increased by between VND700,000 (US$36) and VND1 million ($52) per tonne. After these increases, steel prices (excluding value-added tax) stood at about 13.3 million ($700) to 13.9 million ($731) per tonne.

The prices of steel ingots on the world market in the first half of August also rose in value. Steel ingots rose to $620-650 per tonne, a $50-60 increase. This was the primary reason behind increased domestic steel prices, said the Viet Nam Steel Association (VSA).

The Viet Nam dong also saw a 2 percent devaluation against the US dollar in the previous month. In August, domestic steel consumption increased. The country used 460,000 tonnes of steel, about 350 tonnes more than expected.

Steel prices have remained static so far this month, confounding expert predictions. Almost all manufacturers have retained their August prices, with some even increasing commissions to their agents.

Pig iron dropped to only $600 per tonne and that was a reason for the fall in steel prices, said VSA's deputy chairman Nguyen Tien Nghi. While steel prices have not kept in line with predictions, consumers were also paying more as they often would be buying steel from stores or agents rather than directly from producers.

A report from the Viet Nam Steel Corporation said that steel prices at agents were about VND80,000 per tonne higher than direct from producers.

VNSteel explained that only 70 percent of its steel has been directly sent to consumers. The other 30 percent was sold by agents and stores.

VNSteel's products account for about 56 percent of the total steel volume on the market so that it was difficult for them to control prices and its influence on market prices was weak.

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