The steady steel price increases brought significant profits to steel producers and traders in 2007. Experts say revenue only came in behind real estate and wooden product exports.
“Everyone, who injected money in steel in 2007, could reap fat profit,” said one trader. There seemed to be no risk with steel investment deals in 2007, since steel prices continuously increased. No investor has claimed losses, while many investors said they pocketed several hundreds of billions VND.
In 2007, the ingot steel and finished products’ prices unceasingly increased from the beginning to the end of the year. In early 2007, the steel price stayed at VND8.5mil/tonne, and it soared to VND13-14mil/tonne at the end of the year. Meanwhile, the ingot steel price escalated from $400/tonne to $700/tonne. The demand for steel was forecast to increase by 17-19% last year, which prompted investors to inject money in steel trading deals, and they could earn a lot of money from the deals.
In 2007, a lot of enterprises could get fat profit by importing finished steel from China to sell domestically. Several hundreds thousands tonnes of rolled steel were imported in 2007 for domestic consumption. Every tonne of imported steel was VND300,000 cheaper than domestically made product.
According to the Vietnam Steel Association, in 2006, Vietnam imported 150,000 tonnes of rolled steel from China. Meanwhile, it had imported 190,000 tonnes by April 15, 2007. In April 2007 alone, Vietnam imported 80,000 tonnes.
VIS could pocket a lot of money when it ordered Chinese steel producers to make steel under VIS trademake, and then imported to sell domestically. Analysts guessed that the company could get VND10bil ($0.625mil) for every 10,000 tonnes of steel.
The biggest opportunity came in mid 2007, when Vietnamese enterprises heard that from June 1, 2007, China raised the export tax rate on finished steel exports to 10%, and on ingot steel exports to 15%. Enterprises tried to import ingot steel and finished steel products in big quantities before June 1, 2007 at low prices. In May alone, Vietnam imported 385,000 tonnes of ingot steel at $485/tonne, the volume big enough for one month of steel mills’ production.
After China raised the tax rates on steel exports, as anticipated, steel prices in Vietnam began skyrocketing, which helped steel mills in Vietnam reap great rewards; they used low-price ingot steel and sold it for high prices.
According to the Vietnam Steel Association, in 2007, its eight joint ventures had the pre-tax profit of VND528.9bil, increasing by 55% over 2006.
No exact figures have been reported about the profit of trading companies, but sources say the profit was bigger than steel producers.
Trading companies do not have big expenses, like production companies, which helped them earn strong revenues from price increases. Some of the companies imported rolled steel in mid 2007 at VND8mil/tonne, and only sold at the end of the year, when the price was VND12mil/tonne.
“Everyone, who injected money in steel in 2007, could reap fat profit,” said one trader. There seemed to be no risk with steel investment deals in 2007, since steel prices continuously increased. No investor has claimed losses, while many investors said they pocketed several hundreds of billions VND.
In 2007, the ingot steel and finished products’ prices unceasingly increased from the beginning to the end of the year. In early 2007, the steel price stayed at VND8.5mil/tonne, and it soared to VND13-14mil/tonne at the end of the year. Meanwhile, the ingot steel price escalated from $400/tonne to $700/tonne. The demand for steel was forecast to increase by 17-19% last year, which prompted investors to inject money in steel trading deals, and they could earn a lot of money from the deals.
In 2007, a lot of enterprises could get fat profit by importing finished steel from China to sell domestically. Several hundreds thousands tonnes of rolled steel were imported in 2007 for domestic consumption. Every tonne of imported steel was VND300,000 cheaper than domestically made product.
According to the Vietnam Steel Association, in 2006, Vietnam imported 150,000 tonnes of rolled steel from China. Meanwhile, it had imported 190,000 tonnes by April 15, 2007. In April 2007 alone, Vietnam imported 80,000 tonnes.
VIS could pocket a lot of money when it ordered Chinese steel producers to make steel under VIS trademake, and then imported to sell domestically. Analysts guessed that the company could get VND10bil ($0.625mil) for every 10,000 tonnes of steel.
The biggest opportunity came in mid 2007, when Vietnamese enterprises heard that from June 1, 2007, China raised the export tax rate on finished steel exports to 10%, and on ingot steel exports to 15%. Enterprises tried to import ingot steel and finished steel products in big quantities before June 1, 2007 at low prices. In May alone, Vietnam imported 385,000 tonnes of ingot steel at $485/tonne, the volume big enough for one month of steel mills’ production.
After China raised the tax rates on steel exports, as anticipated, steel prices in Vietnam began skyrocketing, which helped steel mills in Vietnam reap great rewards; they used low-price ingot steel and sold it for high prices.
According to the Vietnam Steel Association, in 2007, its eight joint ventures had the pre-tax profit of VND528.9bil, increasing by 55% over 2006.
No exact figures have been reported about the profit of trading companies, but sources say the profit was bigger than steel producers.
Trading companies do not have big expenses, like production companies, which helped them earn strong revenues from price increases. Some of the companies imported rolled steel in mid 2007 at VND8mil/tonne, and only sold at the end of the year, when the price was VND12mil/tonne.
Source: VietnamNet
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