>> Deputy PM: Steel projects to be considered more carefully
Vietnam faces a gigantic building steel surplus when five new high-capacity plants become operational late this year.
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| Vietnam faces a gigantic building steel surplus |
According to Nguyen Tien Nghi, Vice Chairman of the Vietnam Steel Association (VSA), the plants in Danang City and Thai Nguyen and Binh Duong provinces will provide a combined capacity of 1.5 million tonnes per year, raising national output to nine million tonnes, far outstripping domestic demand of just 6.3 million tonnes.
The building steel glut will push rival companies into fierce competition, a situation further compounded by low-cost steel imports, Nghi added.
According to Nghi, VSA issued a warning over the licensing of the new plants, but to no avail.
The situation is replicated in the country’s cold rolled steel sheet output which has topped 2.7 million tonnes per year, and steel pipe output totalling 1.9 million tonnes per year, double domestic demand.
Currently, around 30 large-scaled steel projects operate under the management of VSA, in addition to the hundreds of small-scale steel plants scattered across the country.
Speaking at the Vietnam Business Summit, as part of the 44th Annual Meeting Board of Governors Asian Development Bank held in Hanoi in early May, Deputy Prime Minister Hoang Trung Hai admitted there had been a laissez-faire attitude to the licensing of foreign direct investment projects, including those in the steel sector.
As a result, many of projects had their licenses revoked due to the slow pace of implementation, or inability and negligence on the part of investors, including the USD9.8 billion Ca Na Steel Complex in Ninh Thuan Province and the Guang Lian Steel Mill in Quang Ngai Province.
The deputy PM agreed that the government should be more careful in granting investment licenses to steel projects in the future.