Steel producers protest block to foreign currency

Song Da Steel Joint Stock Co., Thep Viet Co. Ltd, Hoa Phat Group, Van Loi and Dinh Vu have also filed their complaints with the Vietnam Steel Association, said chairman of the association Pham Chi Cuong.

The companies have not been able to open letters of credit (L/C) since early this month to import scrap steel, scrap iron and other materials as some banks refused to guarantee foreign currency loans.

The central bank does not give priority to steel producers in taking out foreign currency loans from banks. As a result, production activities have been stagnant for months due to lack of input materials. If the problem is not solved, the local steel industry will fall into decline and the market may be overwhelmed with foreign products, the enterprises said.

Cuong suggested the Government loosen foreign currency credits for steel ingot producers as Vietnam’s scrap steel source can meet only 10% of local demand. Domestic companies imported fewer than one million tons of scrap steel in the first half of the year compared to demand of two million tons in 2009.

Local producers turn out 4.5 million tons of steel ingots per year to account for 60% of the steel industry.