Domestic steel production is worried about the proposal of the Ministry of Finance

The intention of restricting the export of billets and opening the market for many construction steel products to foreign countries through taxes by the Ministry of Finance has stunned domestic steel producers.

The Vietnam Steel Association [VSA] has sent a written request to the Ministry of Finance not to increase export tax on billet products [HS code 7206, 7207] and not to reduce MFN import tax for finished steel [HSC codes 7213, 7214, 7215, 7216 and 7210].

It should be remembered that the proposal to increase billet export tax and reduce MNF import tax for a number of construction steel products mainly serves construction works started with the recent increase in steel prices and was said by the Ministry of Finance that, “greatly affects the progress and disbursement as well as the contingency costs of projects, especially public investment projects; affects input costs of many manufacturing industries”.

However, the Ministry of Finance also acknowledged the fact that the domestic construction steel price continuously increased sharply, mainly due to the increase in the price of raw materials for steel production and the steel industry's great dependence on raw materials from outside.

Analyzing this fact, Mr. Nghiem Xuan Da, Chairman of VSA, said that most of the input materials for steel production [iron ore, scrap steel, coking coal, graphite electrode...] are imported, and when the prices of these materials spiked sharply in the global market, it immediately affected Vietnamese manufacturers, causing prices to be pushed up.

"The reason for the increase in steel prices is due to fluctuations in the world raw material market and not due to the impact of tax policies as well as trade remedies applied to steel products," Mr. Da shared.

According to this analysis, China is completely dominating the world iron ore price with 70% of global seaborne ore amount. The country also stepped up investment to serve after the Covid-19 epidemic, so manufacturers actively stocked and imported production materials... In addition, the fear of rising tension between China and Australia also contributed to pushing up iron ore prices.

The prolonged Covid-19 led to transportation costs, the lack of shipping containers and large logistics also affected the increase in steel production costs. 

Source: Satthep.net