Steel Market Continues to Surge on Higher Iron Ore Prices

Vietnam’s steel market is expected to see many changes in the coming time as prices of iron ore will increase by 65 per cent from this April 1 compared with 2007, according to steel enterprises.

 

Iron ore will reach US$70/ton plus transport fee of US$40/ton and fat coal prices will also rise, all will largely affect steel ingot prices so steel price hikes will be unavoidable, a steelmaker said.

 

The increase in iron ore prices may push up steel ingot prices to more than US$800/ton, he added.

 

After Tet holiday, steelmakers have raised their product prices by roughly VND500,000/ton to VND14.5 million-VND14.8 million/ton (including VAT). The steel price hike is attributed to the rise of ingot import price that has now hit US$760/ton, increasing by US$50/ton from before Tet holiday.

 

Iron ore price hike along with other higher input costs will surely make some steel-making countries like China will have to cut output, leading to a reduction in ingot supply. Meanwhile, Vietnamese steelmakers are estimated to need a total of some 4.6 million tons but domestically-made ingot output is expected to be about two million tons, the remaining of over two million will be imported.

 

Currently, local steel enterprises are facing difficulties in buying ingots from China so they are seeking other sources from countries like Malaysia, Thailand, Turkey, Russia, Ukraine, South Africa and Brazil.

 

According to Vietnam Steel Association, the only way to deal with ingot problem is to boost domestic production. However, the figure of 4.6 million tons is now far beyond Vietnamese businesses’ capability. It may be reached by the year of 2010. (VietNamNet)