10:45 | 12/04/2016 Trade
(VEN) - The application of temporary duties on imported steel will give a period of reprieve for domestic steel producers.
Protectionist duties on imported steel took effect from March 22
Following WTO regulations
The Ministry of Industry and Trade claimed that imposing taxes upon imported steel billets and long steel products would contribute to protecting the general well-being of the sector as a whole instead of benefiting some large corporations.
According to the Ministry of Industry and Trade’s Decision 862/QD-BCT, the new duties on steel billets and long steel products of 23.3 percent and 14.2 percent, took effect from March 22.
The move was made despite the opinion by many market analysts that claimed steel billets imported from China had not had a major impact on the domestic market and production. However after conducting examination against domestic businesses, the ministry concluded that almost all steel billet manufacturers had been seriously affected by a rapid decline in Chinese prices in recent years, especially in 2015, when prices fell 27 percent. Several domestic manufacturers have halted their operations. For example, the Viet Trung Steel Joint Stock Company with a capacity of 500,000 tonnes a year halted its production although being put into operation in 2014.
According to the Ministry of Industry and Trade, the application of temporary protectionist duties on imported steel was allowed as part of World Trade Organization regulations.
The Ministry of Industry and Trade claimed that the move would protect the domestic market as no one company currently dominates the steel market with a 30 percent or greater market share. The market currently has 14 large businesses and hundreds of small companies accounting for 73 percent and 27 percent of market share of steel billet products, while 21 large businesses and dozens of small companies accounting for 93 percent and seven percent of market share of long steel products.
According to the Vietnam Steel Association, imported steel billet prices increased by US$100 per tonne due to an increase in the world prices. In the coming time, prices of steel billets and long steel products will increase to ensure reasonable profits in accordance with the goal of temporary safeguard measures and to reduce losses for domestic production. However the possibility of making corrupt use of temporary safeguard measures in order to rule the market and increase prices is an issue.
Thanks to large inventories and domestic plants only currently operating at half of their design capacity, steel supplies on the market are completely guaranteed.