The Vietnam Steel Association has reported a sharp decline in the consumption of steel pipes, cold rolled steel and plated iron sheets in the second quarter of 2011, causing serious difficulties for steel businesses.
Nearly 500,000 tons of steel is lying stockpiled in warehouses. Adding to this, many factories are only producing half their capacity. Vietnam Steel Association (VSA) said that steel businesses are losing VND150 billion (US$ 7,143,000) each month.
VSA said that the decline in steel consumption is also due to the fact that state-run companies and governments have cut down on public investment spending.
Consequently, many steel factories have not invested properly and ignored warnings by related agencies. As per statistics, about 30 percent enterprises used old back-dated technologies and only 40 percent moved for advanced technologies in production.
Last year, the local steel sector fetched $1 billion in exports while it spent up to $7 billion on imports of both raw materials and finished products.