According to the Vietnam Steel Association (VSA), steel produced by southern steel companies has dropped by VND1.2-1.5 million per tonne to VND18.5 million per tonne compared to July’s figures. Northern steel producers have also begun to lower the prices to around VND17.5 million/tonne.

The VSA says that a sharp decrease in the global prices of steel ingots has prompted domestic steel prices to fall. Currently, ingot prices are less than US$1,000 per tonne, a fall of US$250 compared to late July, and are expected to drop even further.

Meanwhile, many businesses have had to reduce steel prices to hold their market share due to a steep decline in the demand for steel in August. The VSA says that the market is expected to use approximately 200,000 tonnes of steel in August, 50,000 tonnes less than in July. Currently, the VSA has 200,000 tonnes of steel and 300,000 tonnes of ingots in stock.

Despite a sharp decrease in prices, steel producers and dealers have made a big profit. In the first six months of this year, the Dinh Vu steel company earned VND227 billion. In addition, the output of locally produced steel also increased by 20 percent compared to the same period last year.

Cement prices have also begun to go down. Retail prices of reputable cements such as Ha Tien 1 and Holcim in Ho Chi Minh City are still VND1.4 million per tonne, a reduction of around VND100,000 per tonne compared to July. Meanwhile, cement in the northern market continues to hover around VND950,000 per tonne, down by VND50,000.

However, there is a big disparity in the prices of cement traded through agents and companies. At present the Ha Tien 1 and Hoang Thach cement factories offer VND1.2 million per tonne and VND810,000 per tonne, respectively.

According to the Vietnam Cement Corporation, the declining demand for cement in August, which halved July’s figure, drove prices down. The corporation says that the Government’s decision to raise retail petrol prices in late July caused production costs for a tonne of cement to go up by an additional VND22,000. However, it is difficult for them to increase prices at the moment because they have to compete with each other to gain the market share.

Market analysts say that the fall in the prices of building materials is testimony to the current downward trend in the commodity market. They explain that the demand for building materials has declined dramatically after the Government decided to put a hold on a number of construction projects.

Analysts forecast that steel and cement supplies will exceed demands as a series of steel and cement plants are getting off the ground and will be in operation in the next few years.

According to Nguyen Duc Thang, an official from the General Statistics Office, the gradual decline in the prices of essential commodities, including cement and steel, shows that the Government’s solutions to curb the current runaway inflation have paid off.

The downward trend in the building materials market is expected to lower the CPI in August, as the housing and building materials group accounts for 9 percent of CPI.

Source: VOV