The Vietnam Steel Association (VSA) announced that it would ask competent agencies to apply safeguard measures on imported rolled steel.
 
According to VSA’s statistics, the volume of imported rolled steel in the first quarter of 2007 saw a dramatic increase with 150,000 tons imported, accounting for 47% of the country’s total rolled steel output.

And this figures show an abnormal increase in imports. The total imported rolled steel volume in all of 2006 was just 150,000 tons, equal to 16% of the total rolled steel of domestic output. The figures were 75,000 tons and 9% in 2005, and 71,000 tons and 8% in 2004.

Rolled steel has been imported mainly from China with selling prices VND300.000/tons lower than the price levels in the domestic market.

The overly high amount of imported rolled steel has led to local production stagnation. A lot of steel mills have had to stop producing rolled steel because domestic products can not compete with imported ones.

Hoa Phat, Vietnam – Korea and Pomina have stopped producing rolled steel, while the Thai Nguyen Cast Iron and Steel Company has not made rolled steel for a long time. Other steel companies, including the Southern Steel Corporation and Vinakyoei, cut in half their rolled steel output in the first three months of the year.

Pham Chi Cuong, president of VSA, said that the association was considering lodging a proposal to competent agencies to apply safeguard measures on rolled steel imports, which comes in accordance with international practice.

Under international laws, a country can apply safeguard measures when a kind of product is imported into the country in a large quantity in abnormal increases, threatening local production.

Not long ago, in the dispatch No. 1232/BCN-CLH sent to VSA on the Vietnam-Italy Steel’s employing Chinese enterprises to do outwork of 5,000 tons of steel bar C3 with Vietnamese trademark, Ministry of Industry (MOI) also posed its opinions on applying protectionism measures.

Pursuant to those opinions, in order to avoid “domino effects” – in which that enterprises turn to do outwork of steel overseas and import low-price steel harming domestic production, VSA should collect information and data to prepare for anti-dumping investigations and applying legal regulations.

On the other hand, because the supply of domestic steel used for construction has far exceeded the demand, and in order to stop those harmful deeds, MOI requests VSA to  consider and to propose legal self-protective provisions, in which import tax rates on round steel and steel bar may be maximized, following Vietnam’s integration roadmap.

Mr Cuong said that VSA would work with the Competition Management Administration under the Ministry of Trade to discuss this issue. Measures that may be applied are to raise the import tax rates or apply a quota on rolled steel imports.