Vietnam Steel Association (VSA) is seeking approval from the Ministry of Finance to raise the import duty on cold rolled stainless steel from 0 percent to 10 percent.
Since Vietnam’s steel industry can now meet the domestic demand for cold rolled stainless steel products with a supply of some 315,000 tonnes a year, the tax increase can help protect domestic production.
In 2010, approximately 140,000 tonnes of stainless steel from China and Taiwan were imported into Vietnam and with no tax, were sold at a much lower price than domestically manufactured steel, harming local production.
Currently, only Vietnam does not tax this product, while some countries like the Philippines, Indonesia and Thailand are applying import tariff rates from 3 percent – 7.5 percent for cold rolled stainless steel products.
But for stainless steel scrap, VSA recommended the ministry to reduce the import tariff from current 25 percent to 0 percent.
Negative growth projection for 2011
The Vietnamese steel industry is expected to suffer a 7.69 percent negative growth in 2011 on the decline of both investment and sales volume, VSA said at a recent conference.
Steel businesses have been running losses recently as the steel prices were around VND15 million a tonne, lower than production costs of VND15.5 million a tonne, said VSA at the “Solving difficulties for Steel Industry” conference held the finance ministry.
Many factories were forced to stop production and even to close their business such as Van Loi Co in Hai Phong City.
The steel association suggested the government apply barrier against imported steel to protect the domestic market and help the steel businesses access to banks’ credit and borrow foreign currencies.
Vietnam’s domestic steel consumption may rise 4 percent in 2012, much lower than previous years due to high lending interest rates and a challenging property market, Thoi Bao Kinh Te Vietnam newspaper reported, citing a VSA report.
VSA said that in 2012, Vietnam will witness many local steel manufacturers going bankrupt. Steel enterprises which consume more energy, more raw materials and produce low quality products will be the first to shut down.