The price of steel has jumped by 20 percent since January and has been trading at around $330 per tonne in recent days, according to the Vietnam Steel Association.
Steel distributors are normally given a spot price for steel products every three to four days, but they now receive daily updates due to the volatility in the domestic market.
One of these distributors said: “Steel prices can change a couple of times within one day. The new price list is often higher than the previous one.”
Vietnam Steel Association (VSA) Chairman Ho Nghia Dung explained that the upward trend in the domestic steel price was in line with rising prices in the global steel market.
The Ministry of Industry and Trade decided on March 7 to apply temporary tariff increases on steel imports, with a 23.3 percent duty imposed on steel billet and 14.2 percent on steel bars. Local distributors tend to increase their inventory when domestic price increases are forecast, Dung added.
The VSA also attributed the price jump to a rising demand for construction steel. The group’s statistics show that for the first two months of 2016, the volume of construction steel sold skyrocketed 56.5 percent year on year.
“This is the construction season, so demand will certainly grow in the next two months,” the VSA said.
The chairman of Pomina Steel Joint Stock Company, one of Vietnam’s top 10 steel producers, said that his company had made plans to produce 80,000 tonnes of steel each month. However, they turned out 100,000 tonnes but were still unable to meet demand. Two out of their three steel plants even exhausted their steel stockpiles.
A steel retailer in Ho Chi Minh City told VnExpress he made adjustments for his business when he saw the market for steel would remain robust.
“From early of 2016, steel prices have bounced back. The ministry also imposed heavy duties on steel billet and steel bars. I think the price will keep going up, so I purchased in large quantities.”
The VSA sent a letter to domestic steel producers on March 16 with their recommendation that steel billet and steel bars should be the focus of production in order to satisfy rising demand.