Five steel makers have halted production due to soaring input costs and shrinking consumption, while cement firms are boosting sales promotions to offload inventories.
Pham Chi Cuong, chair of the Vietnam Steel Association (VSA), told the Daily that as prices of coal sold to steel producers had been hiked and fuel costs had recently increased again, production costs had been further pushed up, throwing the steel industry into a more difficult position.
“Five construction steel makers in the north have suspended production for two months and announced to stop selling their products. Although several enterprises are operating perfunctorily, none of them has declared insolvency yet,” said Cuong.
He said there were about 60 major players in the steel industry who had poured hefty capital into production lines, so they had to struggle to survive at all costs.
According to VSA, steel consumption has gone up slightly in recent months, but producers do not expect stable consumption as long as the property market is still frozen.
Meanwhile, large cement firms are racing to launch promotion programmes in a bid to reduce the high volume of unsold products, resulting in rigorous competition between big and small producers. Discounts are being given to Holcim, Ha Tien and Nghi Son cement products to boost consumption.
Mai Anh Tai, director of the HCM City branch of Thang Long Cement Joint Stock Co., said Thang Long’s factory is running at 85 percent of its capacity. After the major cement makers rolled out promotion activities to boost sales, small enterprises have recorded a strong decline in consumption, he noted.
“The race to offer discounts from big firms makes it difficult for smaller businesses. Given the current loss-making cement business, small producers cannot follow big companies by offering discounts.”